The Hindu Business Line : 'Debt market still remains under volatile condition' — Mr Sashi Krishnan, CIO , Cholamandalam MF

CHOLAMANDALAM Mutual Fund today stands among the smaller-sized players in the domestic MF sector. It nevertheless plans to consolidate its position and increase market share by introducing a couple of new schemes. Mr Sashi Krishnan, Chief Investment Officer, is currently about the most visible face at Chola MF after the sudden demise of its CEO (Mr M Sivakumar). He shares with Business Line his views on the markets and the latest proposals.

Excerpts from the interview.

How has the market for debt funds evolved lately?

The going has been somewhat volatile and not too long ago there were instances of large withdrawals, which have been coming back into the system. The liquid and the short-term products are alive and well at the moment, and there is a fair bit of interest in mainstream income funds too. The situation is still evolving, supported by increasing awareness of mutual funds even in traditional markets.

What is your take on debt?

We have maintained a soft view on interest rates. The liquidity level is quite ample and the Reserve Bank seems to be keen to maintain its soft stance on rates.

Investors have noted the developments that took place in the bond market in April. Yields had moved narrowly after the credit policy on the back of issues related to inflation. Our reading is that the economy may well see sub-six per cent inflation at around the end of the month.

You have talked about new products. What are these?

There are two possibilities. One is a monthly income plan (MIP) and the other is a fund based on the dividend yield theme. The latter will be launched as and when the market again becomes interested in equities. We have already placed the offer document with the regulator.

The MIP, which will invest mainly in debt with a marginal room for stocks, is expected to cater to a niche segment. Most MIPs are free to make small allocations to equities and this can make a difference to their performance figures.

With contractual savings rates coming down slowly and other cuts likely to happen in the foreseeable future, the MIP as a concept can make a real headway in this country. For example, it may make sense to savers who are planning for retirement and are not keen to put their money in fixed deposits.

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