The Hindu Business Line : `Factors favourable to equities'

IL&FS MF has lately turned aggressive in terms of bringing about changes in its style of functioning. For one thing, it has a new CEO in Mr N.K. Sharma, who wants to step up the fund's efforts to create more space for itself in the market.

"For mutual funds in India, the scenario can only improve over the long term," he told Business Line.

Excerpts from the interview

What is your outlook on the debt and equity markets for the short-to-medium term?

Broadly speaking, we expect to see comparative stability in the interest rate environment in the coming months. Going purely by economic indicators, a recovery seems to be on the cards. These factors, coupled with the latest budgetary proposals, will tilt the focus towards equities. In any case, the relative market valuation is highly in favour of equities at the moment, especially so if you consider the strong fundamentals that have been building up for some time.

Given this outlook, how will your schemes gear up to meet market trends, say over the next 3-6 months?

On the debt side, the relative stability of interest rates as anticipated by our team for the medium term will mean that there will be a somewhat different returns spectrum as compared to last year. Our flagship debt product is expected to be taken seriously by investors, especially when they view it against the various fixed-return options that are available in the market.

In equities, our schemes, particularly the diversified one, will continue to be vigilant and the fund managers will watch out for suitable picks. It has of late been among the better performers in its category, and this direction is expected to continue in the coming days.

In the backdrop of your tech fund, what are your current views on tech investments?

We remain positive on the domestic IT sector, which is throwing up new opportunities in areas like BPO. There is enough strength in the offshore model followed by Indian IT companies. The industry is expecting a growth in volumes, while billing pressures seem to be reducing. Many tech stocks look good from the point of their valuations. Our own IT scheme (IL&FS eCom Fund) is trying to spot sector leaders as well as potential niche players.

What have been your latest measures on educating investors, etc.?

We have embarked on a nationwide knowledge initiative, `Mindstorm', under which training programmes and educational sessions are organised. These are aimed at the trade as well as different classes of investors.

The general idea is to add a sense of extra comfort to what the average investor might otherwise experience. Features like direct debit and credit facility with leading banks are also important in this context.

Are new launches being planned?

The MF has entered into a phase of consolidation. It has actually done more than three launches in the last quarter of 2001-02. IL&FS Index Fund, the most recent from our side, is mirroring the two indices which seem to be moving sideways.

We hope to sound out the market with certain innovative ideas that could help investors make the most in the current circumstances.

Incidentally, we have an asset base of around Rs 550 crore at this juncture, roughly 30 per cent of which are in equity funds.

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