The Hindu Business Line : `Pharma, auto seem interesting at this juncture'

CHOLAMANDALAM Mutual Fund is currently in the thick of changes that started with the introduction of a monthly income plan, which is being presented as a modified version of its erstwhile close-ended scheme.

The MF has now proposed to re-launch its technology fund by converting it into a diversified product bearing the `opportunities' tag. "It will allocate assets to multiple sectors, each with a positive story of its own", said Mr Sashi Krishnan, Chief Investment Officer.

Excerpts:

Why did you decide to rejig the tech fund?

The decision, driven by the feedback we have picked up from the market, is aimed at providing investors a chance to benefit from developments that are taking place in a number of sectors other than technology. This is not to suggest that we have suddenly become very bearish on the latter. Technology still has the potential to deliver good returns in future.

However, there is so much happening in other areas, which is being partially influenced by the global strengths that are being acquired by a number of Indian companies. Come to think of it, the tech fund has not done too badly in recent times. It has been investing in leading stocks in sector of its choice, with the net asset value standing at over Rs 11 at the moment.

In recent days, we have been booking profits earnestly and not reinvesting the proceeds.

What are the sectors that look particularly attractive?

Pharma, auto, engineering, power and a few others seem interesting at this juncture. Each of these sectors is being propelled by a variety of factors. There are a few obvious ones, ranging from outsourcing and increased corporate efficiencies.

Quarterly results have been decent in many cases and this is being echoed in valuations. It is not without reason that these sectors have drawn a lot of institutional money towards them.

Based on these views, what has been Chola Growth Fund's strategy?

The growth fund has tried to actively monitor the trends that are emerging in the market. We have lately scaled down exposure to some stocks and added to our cash position. These have been selected from sectors like banking, engineering and auto.

On another front, a few stocks have been added to balance the portfolio. All this while, there have been sizeable inflows from the foreign institutions into the broad market. Profit booking too has happened in a significant manner at the higher end.

The fund has given absolute returns of 40 per cent or so for the three months ending October, outperforming the benchmark index, which provided around 30 per cent during this period.

Your new-look MIP appears to be avoiding equities altogether... .

That's not a correct perception. Like many other MIPs, we are permitted to take a small exposure to equities. However, this has not been done deliberately. The idea was to wait for the market to correct some more. Going forward, the scheme will buy stocks selectively.

But it is difficult to state for sure when this plan will be put into practice. It will be done keeping in view the needs of investors.

Let me add here that towards the end of October, over 15 per cent of its portfolio was in liquid assets. So availability of cash should not be a problem.

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`Pharma, auto seem interesting at this juncture'