Mr Nilesh Shah, CIO  "Debt, Franklin Templeton, has more than 10 years of experience in Investment Management. He maintains responsibility for the Indian fixed income market and the credit analysis of the South-East Asian countries. Prior to joining Franklin Templeton, Mr. Shah headed the structured products group at ICICI Securities and Finance Company (I-Sec).

With the release of the Monetary Policy 2003-04, Personalfn spoke to Mr Nilesh Shah, CIO"  Debt, Franklin Templeton Investments, to unravel what this means for the retail investor.

Pfn: Do you believe the Credit Policy is a step in the right direction?

Mr. Shah : Yes. It is a step in the right direction and continues the good work from the past. We are indeed fortunate to have a Central Bank like the RBI that acts with a lot of foresight.

Pfn: What is your view on income funds in light of the policy measures?

Mr. Shah : The days of double-digit growth that income funds have been posting are over. Returns will be subdued going forward.

Pfn: There are indications that interest rates have bottomed out. What is your view?

Mr. Shah : Going forward, the Bank Rate will be linked to inflation. If we see inflation falling to say 2% as was the case a few years earlier, we could see the Bank Rate being reduced further.

Pfn: You also manage the Floating Rate Fund (Long Term). Do you believe this product still holds appeal as interest rate volatility gets more subdued going forward?

Mr. Shah : To an investor who does not want any volatility in his income fund and wants to protect capital to the best possible extent, the Floating Rate Income Fund makes good investment.

Pfn: What is your advice to the retail income fund investor?

Mr. Shah : I believe investors must allocate their funds across asset classes in debt and equities and across classes within the same asset. Depending on their age profile, they should take on more risk and allocate funds to equities. Younger investors for instance, can have about 50% of assets in equities.

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