Mrinal Singh, Senior Fund Manager, ICICI Prudential AMC
talks about ICICI Prudential India Recovery Fund, shares his outlook on
markets and more.
What is the
rationale behind launching ICICI Prudential India Recovery Fund?
The macro-economic indicators for India are beginning to show all-round improvement. The government is keen to kick start new as well as existing projects and there is a greater thrust on reforms. We believe the economy has reached an inflection point and is expected to recover in the future.
As the policy logjam is resolved, more investments will flow in the economy. Investors can make good money in the next three-to-five years.
This strengthens our conviction in launching ICICI Prudential India Recovery Fund - Series 1, a 3.5 year closed end equity fund that aims to provide long-term capital appreciation by taking exposure in those stocks/sectors that are directly linked to the economy and are likely to grow at a faster pace.
How is this fund different from the other closed end funds launched by your
fund house? Which sector/theme will this new fund take exposure to?
Since October 2013, we have been launching closed-ended schemes
through a series which focus on value & growth strategies. The opportunity
in these stocks was evident because the economy was expected to rebound sooner
or later.
With improving economic indicators, lower oil prices and a sizeable capital expenditure program to be launched by the government, India is on the road to gradual but steady recovery. We have launched India Recovery series 1 to give investors an opportunity to benefit from this opportunity. The fund will invest in a portfolio of high conviction stocks, with no market capitalization bias. While the fund is sector agnostic, it could take exposure in sectors that are more likely to benefit from India’s economic recovery like power, capital goods, automobiles, auto ancillaries, infrastructure and other domestic cyclicals.
Does it become necessary to launch new funds to capture new opportunities in the market? Can't the existing open end equity funds take exposure to such opportunities?
India is positioned towards a recovery trajectory as the macro fundamentals like CAD, inflation, lower crude prices are improving. The government has set the stage for reforms that are expected to contribute to growth and boost productivity significantly in the next few years. Further, in the FY16 Union Budget, the government has done well to reiterate its focus on fiscal consolidation, capex cycle and thrust on infrastructure.
Our NFO comes with a focused vision to capitalize on India recovery theme, offering an excellent investment vehicle to benefit investors from the scenario. Our existing open end funds will also take exposure to some of the stocks which will benefit from the economic recovery.
Your fund house has seen good growth in equity assets. What worked in your favour?
Our focus is to serve investors well and give them a good investment experience. The result of this approach is evident in the performance of our schemes - 100% of our equity AUM has beaten the benchmark across 1 year, 3 year, 5 year, 10 year & 15 year period. We believe that a fund house managing money well is bound to attract more investments. We will continue to serve our investors well and ensure they have a good investment experience. This should lead us to further growth.
What are the next triggers for markets?
The
macro-economic scenario for India looks healthy due to the positive outlook on
both inflation and current account deficit. This should translate into lower
interest rates which will increase demand and improve corporate profitability. The next big triggers for the market could be the improving
macro-economic trends and falling interest rates besides the reforms which may
help eliminate bottlenecks in several sectors.
What kind of
returns can we expect in 2015?
Equities albeit not cheap, continue to remain a good long term
investment vehicle. While in the short-term there could be some volatility due
to global factors, the outlook for equity markets is very positive over 2016 to
2018. With the lower crude prices and good growth prospects, India is the most
attractive emerging market in the world and therefore, it is an opportunity for
people to invest for the long-term in Indian equities. For that matter, even
debt markets offer good investment opportunities, considering the fact that
interest rates are moving down. Therefore, we recommend investors to invest in
2015 in order to create wealth over the next 3-5 years.
