Dilip Kumar Mandal, MD & CEO, IDBI Asset Management Limited says, the strategy would be to devise a portfolio which consists of value stocks, growth stocks, high and low beta stocks
The past one year has been extremely good for us as well as for the industry. We have launched three equity schemes last year, thereby widening our bouquet of offerings. Our equity AUM has more than doubled, to Rs 2,825 crore (as on September 20, 2017). In addition to this, we have also shown good performance under both equity and fixed income. On the whole, it has been a very satisfying year for us, even though there is still scope for improvement.
Managing return expectations
We seek to design portfolios that can take care of short-term volatility and deliver steady, superior risk-adjusted returns. This is however not always very easy to achieve, so we ask investors to keep realistic expectations. There is always a possibility that we exceed expectations and avoid disappointments. Discipline and patience are a key requisite for equity investing.
We have communicated to our investors that they should moderate their return expectations in view of the structural shift in inflation rates and linking of small-schemes rates with G-sec rates. In order to optimise returns, we have expanded our investment universe by rigorously identifying acceptable credits and dynamically managing portfolio duration in line with objectives of specific schemes.
A bull phase in an equity market is combined with a phase of market correction. The strategy would be to devise a portfolio which consists of value stocks, growth stocks, high and low beta stocks, etc., in a proper composition in an effort to minimise volatility.
We have a diversified debt portfolio. Our main focus is to maintain the credit quality of our portfolio by consistently reviewing the investment universe. We also ensure liquidity by having increased weightage on more liquid securities, churning the portfolio to test the liquidity of securities and maintaining optimum portfolio duration in line with schemes and objectives.
Growing clout of domestic funds vis-a-vis FIIs
FIIs have been on a decline mode since May 2015, while the inflows into domestic mutual funds have been steadily rising. Markets have responded positively to increased participation from Domestic Institutional Investors (DII) in recent times.
Outlook for equity and debt
We are positive on the economy in the long term and we are in a phase where investors can expect reward from the market. We are positive and cautiously optimistic on debt markets in India due to low inflation and better macro factors like lower CAD and fiscal deficit, stable currency, etc. However, we are also mindful of things like loan waivers by state governments, which will put pressure on the yields, and monsoon rainfall deficit, leading to acceleration in inflation.