Mr. N. Prasad, CIO, Sundaram Mutual manages the portfolios of Sundaram Growth Fund, Sundaram Tax Saver and the Equity component of Sundaram Balanced Fund. He began his career with Canara Bank and has been associated with Canbank Mutual Fund and ICICI AMC. He moved to Sundaram Mutual in 1996 as Chief Investment Officer.
In an exclusive interview with Personalfn, Mr. Prasad shares his views on the reforms process, the markets going forward and the Indian mutual fund industry.
Pfn: How does 2004 look for the investor after the sharp run-up in stock prices in 2003?
Mr. Prasad :
I expect a normal market in 2004, 2003 saw markets offer abnormal returns which came on the back of two bad years. 2004 is likely to be a normal year where there could be ups and downs and volatility. The one-sided secular run which we saw in 2003 is unlikely to be repeated.
Pfn: What kind of an impact will the change in government have on the reform process?
Mr. Prasad :
From what the new government has said, the face of reforms is likely to change. There is likely to be greater thrust on the rural side which seems to have been ignored by the previous government. But until we see the budget, how allocations are made, where resources are raised from (I am not sure) how things will surface. Overall reforms in the broader sense are likely to continue, but the components of reforms might change.
Pfn: So you believe there will be a negligible impact on reforms?
Mr. Prasad :
There are 2-3 types of reforms. One is raising resources and reducing the fiscal deficit, and then there are structural reforms like labour reforms, allowing more FDI in retail etc. We have to see what the government’s plan of action is. Perhaps it is likely to be unveiled in the forthcoming budget. Anyways the finance minister has spoken about attracting FDI and investment in the core sector which is a positive sign.
Pfn: What is your view on plain vanilla long-term income funds? Is there still place for the product in investor portfolios given the way yields have moved for over 6 months now?
Mr. Prasad :
In a few days we are likely to see a change in the durations of income funds if the interest rates keep moving up; this in turn will improve the returns from income funds.
Pfn: Coming more specifically to Sundaram Mutual Fund, have you witnessed some pressure last year to perform from the demanding investor community given your conservative style, especially when aggressive peers have delivered better returns?
Mr. Prasad :
Not really, we have moved up significantly. Our idea is to have different sets of products like the Select Focus, Select Midcap, and Growth etc. which cater to different segments of the population. We don’t want all the segments to come to the same scheme. Each product has been pitted for a different segment.
Pfn: Do you think the domestic mutual fund industry has finally come of age, with a lot of thematic funds like the Sundaram Leadership fund being launched? What more is likely to happen going forward?
Mr. Prasad :
So far the industry has come up with funds from the investment angle; it has not come out with funds from the investor’s point of view. We don’t have funds to address specific needs. Like we have children’s plans but there aren’t many schemes of this nature. From the customer’s view, being able to address a particular need is more important.
Pfn: What is your advice to the retail investor in this environment?
Mr. Prasad :
I would advise the retail investor to be patient.
