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Our Bureau

Investors are uncertain near-term prospects of equities

Kolkata April 5

Portfolio management services are suddenly not that hot anymore.

The equity market and the doubts that are now stemming from it have taken their toll on PMS, which was growing at a scorching pace till recently.

PMS, made popular by securities brokers and fund houses, is not a very serious draw at the moment, with investors generally not buying the idea of placing large amounts of money with portfolio managers, often disregarding the relatively high fees that these services require.

Bull run

A seriously unstable market, which has led to the view that equities in the near term will not deliver as well as they did in the recent past, has rendered PMS a far less attractive idea, say sources.

In terms of fresh subscriptions/sales, the scenario is not as encouraging, they add.

Mr Soumitra Sengupta, Director, Lamron Analysts (which runs a model portfolio of stocks), feels the situation is a result of a definite overkill, made possible by sections, which wanted to enlarge their assets irrespective of the costs, having actually succeeding for some periods of time during the recent bull run.

"In a way, this is healthy for those who did not take such bursts of wealth creation for granted," he noted.

While incremental figures related to PMS sales are not available, investment circles suggest that there is a slowdown of sorts on this front. Fewer investors are convinced about PMS than they were at this time last year.

In fact, the early part of calendar year 2006 was particularly good for its proponents; the trend was then ruling firm.

A wide range of service providers make up the portfolio management space.

On the one hand, it includes such large institutions like Kotak Mahindra, while on the other, it includes investment management outfits like ASK.

Thrown in the middle are mutual funds, which off late introduced PMS options for larger clients.

Debt may steal the limelight

Lot of people are not convinced about equity at this juncture, a scenario that spells good news for debt, it is pointed out.

Mr Rajan Krishnan, who heads Principal MF, feels serious money is already set to move towards fixed-income options, especially the short duration ones. "Debt is being seen more positively. There are sections that expect debt to perform stronger than before," he said.

Investment professionals, who agree that diversified portfolios need to include equity and debt in judicious proportions, contend that fixed-income will now become more important, gaining acceptance from investors who wish to reduce risk. A tendency towards investing in monthly income plans, which primarily invest in debt securities but allow limited exposure to equities, is also not ruled out.

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