Nilanjan Dey

Mr Naval Bir Kumar

Kolkata, June 26

YEARS after it professed its love for debt and only debt, Standard Chartered MF has lined up its first equity product. Mr Naval Bir Kumar, MD, shares with Business Line his views on equities.

"We will not restrict ourselves to one or more styles when it comes to allocating to stocks," he tells Business Line.

Excerpts:

How do you explain this sudden change of heart after avoiding equities for so long?

It is true that from the very beginning we have stuck to what has been our core business - management of debt funds. We grew in that space, managing about Rs 8,000 crore today through a number of debt products.

Mind you, Standard Chartered MF's foray into equities in this country does not necessarily mean that the India story is simply the best in the world. What we mean to say is that many Indian companies are doing well. The market here is strong and well-regulated, with reliable transaction processing systems.

We hope to perform well on the equity front, courtesy our latest launch and the other funds that are likely to be introduced subsequently.

In fact, our second scheme, named Standard Chartered Premier, has been conceived already; it will be markedly different from this one.

With the index at over 7,000 points, are you not quite late in arriving?

We believe that good value propositions can be found in this market, irrespective of the index level. That investors have seen a new peak is something that our fund management team is fully aware of.

We will use what we think is a good stock selection process. The latter will consider companies that have the right businesses. These should have the potential to do well in the days ahead despite being undervalued at the moment. The business model will have to be sustainable over time.

There would be a serious attempt at diversification, courtesy an overall sector limit. There would be limits on stock holdings and concentrated positions too. And, in the backdrop of a growing stock market, such a fund should account for at least some part of an investor's portfolio.

Isn't there a possibility of some money moving from your short-term schemes into the equity product, courtesy certain distributors?

The point is, most of the money that could have moved has been already taken out by investors who have done their equity allocations. We are hoping to get fresh investments, sticky monies that will not be moved in and out every three months or so!

The equity fund should be tried out by investors who are more committed than that.

Let me add here that our debt corpus, spread over a number of schemes, has lately been fairly stable on a year-on-year basis.

As for debt, is a turnaround expected anytime soon?

Agreed, debt has not been very encouraging lately. But let me say that things are changing for longer-term debt products.

In fact, we are advising investors to partially shift from short-term options, including liquid and floaters, to the relatively long-term ones. Of course, this must be done on a selective basis. So, if you are a debt fund investor, there is a good case for re-working your portfolio by transferring some of your exposure back to income funds.

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