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Time to look at debt again

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Nilanjan Dey

Kolkata, July 17

LIKE the others in the asset management industry, Sundaram MF too has been somewhat carried away by the market's inclination to dabble in equity. And like so many of its peers, it has in recent days tried to launch one equity fund after another.

Yet, Mr T.P. Raman, MD, strikes a different note when he says that the market is overly - and perhaps quite unnecessarily - focused on stocks. "For all the noise about equity, this is clearly the time to look at debt again", he told Business Line in an interview.

Excerpts:

Retail investors are still trooping in into equity funds in large numbers. Your comments. Yes, there is a surging demand for equity products, the ultimate result of which may not be quite cheerful. What is worrisome that retail clients are stepping up allocations to equity without much consideration for anything else. This is not to suggest that investments in stocks are not required. What I mean is that no one is seriously considering debt at this juncture. This should not have been the case... the market has to appreciate that there is scope for debt to perform once again. Investors, who chose to stay away from it earlier, should check out the latest figures. That might change their opinion a bit.

In some cases, the returns are actually entering positive territory. Also, the volatility seen so many times in the past is somewhat on the lower side at the moment. That too should encourage you to explore the possibility of investing more in debt funds.

What is the feedback on this from distributors?They have mostly indicated that their clients are far too keen on equity. As I said, a rational thinker will find the situation a little difficult to appreciate.

Funds are busy bringing out new equity products although a few debt schemes have also been introduced in recent times. Retail investors are largely known for what is often called `sticky money' - money that stays invested for longer periods. And, as every ones knows, getting corporate money into equity is a difficult proposition.

On another front, we are becoming increasingly aware of the potential being generated in the smaller centres. I am referring to the likes of Nasik and Asansol. These are fast emerging as good retail bases.

Do you see the market moving up further?Well, the thing to note is that the index is bouncing back every time there is a decline. In fact, this has been happening every now and then. We keep on hearing about overseas players, including a clutch of Japanese funds, allocating more to India. That seems to be a good sign for India, seen by many as a major investment destination.

Sundaram MF is without a collaborator ever since Newton moved away. Any plan to rope in a partner now?No. Our erstwhile partner was taken over by a group called Mellon. The latter, from what we learn, has no plans to enter the Indian market right at this moment. They have recently stepped into Europe.

We feel we can cater to the domestic market well enough on our own, based on the strengths that have been built over the years. Sundaram MF will do this with, among other thing, new products. We will soon add to our equity offerings a fund that seeks to tap capex opportunities.

(This article was published in the Business Line print edition dated July 18, 2005)
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