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`Time not ripe for retail money to flow in' — Mr Rajan Krishnan, Vice-President, Zurich India MF

Nilanjan Dey

It's not correct to say that the market's enthusiasm for gilt options has died down altogether. In a gilt fund like ours, which came in early 2000, the general idea is to provide stable returns.

ZURICH India MF has been among those fund houses that have lately seen a substantial increase in their asset sizes. This, says Mr Rajan Krishnan, Vice-President, is a result of a combination of factors — right products, including the recently-launched short term plan, and innovations aimed at improving investor servicing. But what about performance?

"High returns are sometimes a function of high risk," Mr Krishnan told Business Line in an interview.

Excerpts from the interview.

Given MFs' major focus on institutions, what's your take on the retail market?

It's true that the wholesale segment has been the funds' main focus. However, we feel that retail can only grow from here. Funds encourage retail investors to make full use of all the facilities available, including devices such as flexible withdrawal and systematic investment.

As for equities, retail investment never went away entirely. The small investor is sensible enough and is quite aware of the ground realities. But he is probably a more choosy person today.

At the moment, Zurich is adding around 1,800-2,000 investors (all included) per month, and has seriously started cultivating the second-tier cities. General sentiments will have to improve before retail money starts flowing in again.

As for inflows, debt is still king. Is this likely to change?

Historically debt has always secured attention from investors, as equity is by far riskier. Debt, however, has its own risks, but these haven't really inhibited anybody for long. The situation is not expected to get reversed in the foreseeable future.

In keeping with the trend, funds have done a lot to woo investors in debt. Look at all the short-term plans and the fixed maturity plans that have been introduced lately.

There is a distinct market for these options and investors have an appetite for such products. And there are incentives to invest ... take for example STPs that have only a 15-day load period. All these have actually helped in re-directing the investor's interest towards short-to-medium term debt options.

All of a sudden nobody seems to be talking about gilt funds. Your comments.

As you may recall, gilt funds were the toast of the market till sometime ago, and distributors did a good job of selling these funds. Bulk of that attention has already shifted to other things. But it's not correct to say that the market's enthusiasm for gilt options has died down altogether.

In a gilt fund like ours, which came in early 2000, the general idea is to provide stable returns. In recent times we have stayed invested in short-term Treasury bills in the savings plan.

The fund has two other plans - investment and provident - with longer portfolio maturities.

Any new launches?

We have worked out plans to do an index fund and an equity fund. The latter will be a specialised scheme of sorts and will be a play on `Leadership', the theme on which it will be based.

In fact, these plans have been around for quite some time and we have already gone to SEBI with them... these will be introduced when the time is right, we have not made up our mind on this. It is not necessary that these will be launched simultaneously.

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