Adhere to Principle of Risk-adjusted Returns | Value Research Dinesh Ahuja, Fund Manager says that absence of frequent trading calls on duration is one of the reasons why SBI Corporate Bond has done well
Interview

Adhere to Principle of Risk-adjusted Returns

Dinesh Ahuja, Fund Manager says that absence of frequent trading calls on duration is one of the reasons why SBI Corporate Bond has done well

Dinesh Ahuja, Fund Manager talks about the reasons behind the above average performance of the SBI Corporate Bond fund.

Adhere to Principle of Risk-adjusted Returns Dinesh Ahuja, Fund Manager

What is your outlook on interest rates in India?
Benign global demand conditions, lower prices of crude oil and commodities support our view for current low levels of inflation to be sustained. Rates have moved lower, but we believe there is scope for fall in interest rates.

What is your framework of taking a duration call?
Fundamental analysis based on growth inflation outlook determines our view on long term trajectory of interest rates. Technical analysis involves our estimates of demand supply conditions in both short term and medium term. These form part of our framework for a duration call.

What is your framework of taking a credit call? What kind of credit risk you don't take at all?
We believe in adhering to the tenets of Capacity, Collateral, Covenant and Character while taking a credit call. We do not take risks where any of these covenants are not met at all. The fund does not invest in papers rated BBB+ or below. Both a top-down sectoral view and a bottom-up view of the company are taken before an investment decision.

Any rule which you rigorously follow in managing your fixed income fund today?
A passive accrual strategy is followed. It implies no active trading calls or frequent changes in duration of the portfolio.

In your view, how should a long-term fixed income investor optimise his returns?
A long term investors should seek to allocate funds across the maturity ladder. A healthy mix of liquidity funds, duration funds and accrual funds should form part of an investor's portfolio depending upon his risk appetite. Duration funds should also be allocated along short term and long term funds.

What will you attribute the above average performance to?
A high accrual, absence of frequent trading calls on duration, adherence to the principle of risk-adjusted return is responsible for the performance of the SBI Corporate Bond Fund.

Please click here to read the analysis of this fund.


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