The Hindu Business Line : `Investors should at all times be on their toes'

MR RAVI Mehrotra, President, Franklin Templeton India, isn't really a man who gushes over things at the drop of a hat, however close to his heart these might be. Instead, he speaks in his usual measured tones about issues he is known to be most comfortable with - trends in the stock market, risks associated with equities, habits that investors must cultivate.

Here, he adds a word or two about Franklin Templeton, the fund house he moved into from the erstwhile Kothari Pioneer MF.

Excerpts:

Isn't this a time for MFs to tell their investors to be alert?

That is always the case. I mean investors should at all times be on their toes, irrespective of the size of their allocation.

As professional managers of their money we have to advise them not to expect spectacular results after ultra-short intervals. It is not that we are telling them to be cautious only because the index has crossed a certain mark. The market has clearly seen a good run-up. It, however, cannot be suggested that there will be no more positive surprises in store.

At the same time, one cannot say for sure that an upside will necessarily happen.

Is there a case for pulling out? Should investors consider at least a partial withdrawal?

Again, there can be no straight yes-or-no answer. It is for an individual investor to decide. If he a believer, if he finds merit in staying invested... well, he then should stand by his beliefs.

If an individual sees no value, he is perfectly within his rights to take his money elsewhere.

In fact, we could have argued similarly when the index was at, say, 6,000 or 7,500. As I said before, the market has indeed moved up and so many stocks have advanced handsomely.

Now it is for you to take a view, considering all the elements that should guide your decision to remain invested or exit from the scene.

Are large-scale redemptions happening?

Yes, some sections have redeemed and moved away. Their average returns from equity funds must have been quite decent, which probably prompted them to exit. At the same time, we have seen new money entering our funds. In fact, the way some of the existing equity funds - here I am talking about the MF industry as a whole - have drawn surpluses underlines the fact that investors have been genuinely enthused by the stock market.

How has your PMS initiative taken shape?

To introduce you to the basics, a user of our services can choose between two options, FT Select and FT Opportunities, depending on his profile.

The first lets you invest in a close group of 15-17 large-cap stocks, while the second is more flexible in nature. Let me add here that the minimum ticket size is Rs 50 lakh.

FT Opportunities, incidentally, is a collection of stocks from across the market cap spectrum, which can be supported by a fair exposure to debt and money market instruments. The concept of using PMS, as you would know, is considered to have already found a good number of takers in this country. It is also believed that there is scope for further growth on this front.

Any new products?

I cannot give you specifics. Let me just say we are working on something that should emerge as very special. We have recently gone through a product realignment exercise, marked by mergers of a few schemes. Franklin India Flexi Cap was our last launch on the equity side.

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`Investors should at all times be on their toes'