Mr. Milind Nandurkar, Senior Fund Manager – Fixed Income, aged 33 years, is an engineering graduate with a Master's in Management from Indian Institute of Management, Bangalore. He specialises in fixed income securities and money market operations. Prior to joining the AMC in 1998, he was in charge of money and debt market operations of SBI Mutual Fund for nearly four years and was with TELCO from July 1989 to June 1992

In an interview to Personalfn, he shared his views on the domestic economic scenario, SUN F&C’s International Debt Fund and outlined some of the challenges confronting the debt fund segment.

PFN: What is your view on the domestic economy vis-à-vis the global economy? When do you see a turnaround happening?

Mr. Nandurkar: Early signs of recovery in the domestic economy can be seen from the latest IIP nos published. The good monsoons and government spending on the infrastructure particularly the golden quadrangle road project would hold a key to the turnaround. We believe, that a mild recovery phase has set in. Globally, the situation is similar in the US economy. The small recovery as seen in the consumer demand in US is not supported by the employment and inflation data. The outlook is that global economy may take slightly longer to pick up than is being currently expected by the market.

PFN: What is your view on interest rates at present and going forward?

Mr. Nandurkar: The interest rates will remain range bound but the markets may remain choppy. The low inflation and credit pick up aided by high liquidity in the money markets would prevent a spike in interest rates. On the other hand, the concerns on large government borrowing and already low levels of nominal interest rates would prevent big rallies in debt markets.

PFN: How has SUN F&C performed on the fixed income side vis-à-vis its larger peers? Are you seeing good inflows in the income funds, particularly on the retail side?

Mr. Nandurkar: SUN F&C’s Fixed Income Funds have done well as compared to its peers in the industry. As per the latest data compiled by Crisil SUN F&C’s Money Value Fund Bond Option is ranked 3rd among 21 competitive funds and is ahead of all the larger peers in the industry.

PFN: You plan to launch an international debt fund. Could you throw some light on how you plan to make this a success?

Mr. Nandurkar: International Debt Fund provides the Indian investor with an opportunity to diversify the single market , single currency risk that he is currently exposed to. We plan to invest into developed markets mainly the US and European markets which provide a large opportunity set of investments. Obviously, by investing into this fund the investor is also exposed to the Forex market. The investor may benefit if rupee depreciates or if the fund manager hedges the currency list by booking forward contracts in dollars.

PFN: With the budgetary provisions to tax dividends, FDs look competitive in terms of returns (with the 80L benefit). How do you expect debt funds to measure up?

Mr. Nandurkar: Debt funds provide additional advantages in terms of portfolio diversification, liquidity and active portfolio management as compared to FDs. Returns on debt funds would be market related. They should compare favourably with return on FDs with similar credit quality.

PFN: Right now, what are the biggest challenges facing the mutual fund industry, particularly on the debt side?

Mr. Nandurkar: The debt market has rallied a lot in last couple of years and investors have got super normal returns. As the market becomes range bound the return expectation from the debt funds has to be considerably toned down. This expectation management is perhaps the biggest challenge for debt mutual funds today.

PFN: What is your advise to debt/gilt fund investors at this point of time?

Mr. Nandurkar: Decide your risk levels before you start investing. Higher returns only come with higher risks. There are different categories of debt/gilt funds available in the market. One needs to find out which fund suits one’s needs. Also one should not base one’s return expectation based on historical performance of the fund. What is important is to study the funds investment portfolio and then decide.

PFN: There has been some consolidation in the domestic industry. You have announced plans to acquire Jardine Fleming's mutual fund business. Do you expect to be a big player in the industry or eventually sell out at the right price?

Mr. Nandurkar: We are here for the long term. We would look to increase our business to organic and in-organic growth. We expect to be a respectable and well performing fund house in the country.

PFN: Who are the three persons you admire the most?

Mr. Nandurkar: I admire my father the most. I have learnt a lot from him particularly on how to lead a happy life.

PFN: What books do you read?

Mr. Nandurkar: Anything related to sports.

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