In this concluding part of the interview, Ashu Suyash, CEO
of L&T Mutual Fund shares her views on markets, products and more…
What is your outlook for markets in the near term? Which are the sectors that L&T Mutual fund intends to focus on for the financial year 2013?
2013 has started on a strong note for global markets though we expect this year to have a moderate growth; however, some divergence will be seen at a country level with some experiencing recession and others growth. Economic policies, monetary and fiscal, will be the catalysts for financial markets. With policy rates in major developed economies already close to zero levels, central banks are expected to remain in an expansionary mode. The US Federal Reserve and several other central banks are targeting reduction in unemployment, in sharp contrast to the earlier aim of controlling inflation. In the US, macroeconomic data releases on the housing front and in some other segments have been encouraging. Moreover, exploitation of shale gas reserves could tip US as the largest manufacturer of oil and gas and lower oil prices.
In Europe, ongoing austerity coupled with tight financial conditions, structural reforms and uncertainty could result in further lower growth. We expect Germany to contribute to the region’s growth. Despite facing their set of challenges, emerging markets seem to be in a better position than the developed economies.
Going into 2013, while the announcements of reforms in the last few months have been a big positive, the successful execution of these would drive sentiments and markets. In January, we again witnessed a string of actions from the government. One is that the government in a decisive move to contain oil subsidy burden, announced a hike in diesel prices and bulk consumer sales at market rates. Secondly, to control gold imports, the government announced a hike in import duty from 4% to 6% with immediate effect. These measures are an attempt to lower the current account deficit.
A moderation in inflation followed by lower interest rates will impart macroeconomic stability. Receding inflationary risks in the last few months have raised hopes of further moderation over the course of the year. This may set the necessary background for the Reserve Bank of India to ease rates in a calibrated manner. The combination of cheaper credit coupled with a conducive policy environment is expected to kick start the domestic investment cycle and this should be well supported by foreign investment flows.
The financial sector is likely do well in 2013 as recovery in domestic economy coupled with lower interest rates augurs well for loan growth and bad loans. We prefer cyclical stocks particularly materials and auto ancillaries over defensives given the valuation gap. Capital goods will be contingent on likely recovery in the capex cycle, which should begin in the second half of 2013. It would be interesting to see the performance of export oriented sectors such as IT since the sector was boosted by a favourable currency in 2012. Mid-caps should see a strong performance as economic recovery; lower rates and revival of domestic flows are key catalysts for these stocks.
L&T and Fidelity had merged a few schemes like L&T Gilt fund, L&T Monthly Income Fund and L&T MIP Wealth Builder. How has their performance been after the merger?
It has been two months since the acquisition, as such; it is too short a time frame to comment. Nonetheless, the performance of the three funds has been robust. L&T Gilt Fund is in the top quartile over the last one year in light of our active duration positioning. L&T Monthly Income Plan is a 4 star rated fund and is part of many top rated charts.
What are the new products we will get to see from L&T MF? How would it differentiate you from the already established AMCs?
We have a comprehensive suite of 25 unique funds across asset classes, risk profiles and time horizons. These include funds with a proven track record such as the L&T Tax Advantage Fund, L&T Equity Fund, L&T India Large Cap Fund, L&T Triple Ace Bond Fund, L&T India Special Situations Fund and L&T Flexi Bond Fund.
Our product range has the depth and breadth to meet the needs of customers across segments. For the high net worth and savvy customers, we have global products such as L&T Global Real Assets Fund, which feeds into Fidelity’s Luxembourg-based SICAV – Fidelity Funds Global Real Asset Securities Fund. This makes us unique as a domestic asset management company. At the same time we have a number of low risk products and diversified equity funds to meet the needs of first time investors.
What are your plans to expand in B-15 cities?
We have a total of 56 branches of which 41 are in cities beyond top 15. Most of these branches have been built in the last two years in preparation for growth. We now also have a full product suite and performance and distributor coverage and are well positioned to gain share.
