The Hindu Business Line : `Our plan is to have a small number of funds, not a very wide range of fashionable products'

Those who dabble in the Indian market for fixed-income are progressively getting more quality-conscious, notes Mr Andrew Wells, CIO, Asian Fixed Income, Fidelity, who was in India recently to flag off Fidelity's fixed-income business.

The MF is aware that it is moving straightaway into a segment that has already seen intense competition. "Investors need to identify good-quality debt even as they seek to spread their risk," he tells Business Line.

Excerpts:

The fixed-income scenario in this country seems to be set for rapid change. How do you view this?

Yes, a change in perception is probably around the corner, especially with some sections shifting part of their attention from equity, which has been quite the norm in the past few years. Worldwide, the interest rate cycle is changing and the Indian market has not stayed isolated on this count.

The fixed-income movement here will build up further if new classes of investors look at it more actively. I am referring especially to retail investors. People need to understand that it can genuinely supplement their overall asset allocation.

How does Fidelity propose to conduct its fixed-income business in India?

We are just about to step into this segment, courtesy a short-term fund. So far, as you know, we have mainly done equity funds. Fidelity will build the business and this may be seen as a starting point.

We have studied the Indian market and have a team in place. The plan is to have a relatively small number of funds, not a very wide range of fashionable products. A cash fund has now been mooted. Remember, we already have a multi-manager cash fund.

Getting enough well-rated paper seems to be an issue in India. What is your assessment?

This is a matter that may be dealt with by the fund management team that I talked about earlier. However, the point is simple - good quality securities are of crucial importance and committed investors will constantly look for such securities.

It is our belief that market participants will gradually become more watchful when it comes to quality. Higher consciousness on this front will set in even as the picture becomes bigger.

As for fund managers, they will have to keep a close watch on the issues that impact bond prices. The challenge is to meet investment objectives by building portfolios that comprise top-quality securities.

What can drive fixed-income investing here?

In about 20 years, large sections of the Indian middle-class will retire or will be on the verge of retirement. Generating income without subjecting themselves too much to the uncertainty associated with stocks will be a big issue for them. They will have to stay in tune with all the trends. Investors are sometimes too focused on timing and tend to become acquisitive at times. This habit should be overcome.

Also, the scenario will turn for the better if there are more players and there is greater variety in terms of the issuing companies. Institutional investors, banks included, seem to have a good deal of resources at their disposal. A lot of this will continue to come into the fixed-income market if returns prove to be attractive. Hopefully, the retail player will also not stay away.

More Stories on : Interview | Mutual Funds

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Build retirement assets thru MFs

Small, mid-cap cos a big draw for pvt equity funds

And every fair from fair sometime declines

`Our plan is to have a small number of funds, not a very wide range of fashionable products'

ADRs, underlying equities see divergent trend

Consolidation mode may extend