Markets look expensive

Sneha Padiyath
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Ritesh Jain, Head of Investments, Canara Robeco Asset Management
Ritesh Jain, Head of Investments, Canara Robeco Asset Management

Investments chief at Canara Robeco sees a time or price correction phase with intermittent spurts

Ritesh Jain has been with Canara Robeco Asset Management Company since 2008. Currently the Head of Investments at the fund house, he was promoted to this position in April 2011. Prior to this, he was the Head of Fixed Income for two years. Jain has also worked with IDBI Bank and Kotak Asset Management Company. Canara Robeco AMC, as of June 2012, manages assets worth Rs 7,579 crore.

In an interview to Business Line, he shared his outlook on the markets and what investors should do at this point of time.

Where do you think markets are headed at this point? By when do you expect stability to return to the markets?

The markets appear to be fairly valued at this juncture if we take into account GDP growth of 8-9 per cent. With growth now moving into the region of 5-6 per cent for the next couple of years and inflation remaining around 6-7 per cent on an average, markets look expensive. So at best we can hope for an extended sideways correction phase. It could either be a time correction or price correction period with small spurts on the upside in the interim. Broadly, we do not expect markets to bottom before the end of this financial year.

Do you think the industry needs more product innovations in order to draw in new investors?

Product innovations have to go hand-in-hand with financial literacy in any financial market. Product innovation without knowledgeable investors may lead to mis-selling of products in the marketplace, in turn hampering the industry overall. We have seen international funds emerge as a category in the mutual fund industry but without financial education investors would not be able to appreciate the “diversification” importance that such funds bring to the table.

What would you advise investors at this point of time – equities, debt or gold?

We believe gold is currently in the midst of a secular bull market, which demands lump sum investment strategy. Equities on the other hand, are best suited to work for investors under the SIP strategy. Investors under the debt allocation can certainly look at one-two year investment.

How are you dealing with declining assets under management and redemption pressures?

As a mutual fund, we have been focused on attaining steady growth in the core assets group (excluding fixed maturity plans). Our strict adherence to risk management policies and long term fund performance has allowed retention of client assets for us across our product ranges. While we particularly do not see any strong redemption pressures however, fresh inflows have not been rising at the pace as expected.

What steps are you taking as a fund manager to ensure good returns for your investors?

Our performances across our funds over the medium to long-term stand testimony to the investment discipline within the investments team. It is our constant endeavour to deliver and maintain competitive performance consistently.

(This article was published on August 5, 2012)
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