 
Prashant
Jain ANOOP
BHASKER RITESH
JAIN |
Experience Pays Active
management & rigorous analysis is key to Dhawal Dalal's performance Ten years ago when Dhawal Dalal stepped into the corporate world after his MBA in the US, he had no idea that he would end up managing debt funds in India. But two years at Merrill Lynch Investment Managers in Princeton, New Jersey and Dalal was convinced that his switch to Merrill’s Indian operations was the right move. Since then, there has been no looking back. The superior returns of his funds are a result of active fund management which helps him read the bullish or bearish undertone of the market before others. “An active research desk that feeds you critical data on the borrowing cycle and liquidity situation plays a key role while making decisions,” he says. To Dalal who is the senior vice president - head of fixed income, the ability to predict how other players will behave and gauge market sentiments is a key requirement before making a debt call. “Your returns depend on your ability to monitor sentiment, trading positions and domestic and international factors,” he says. While there is no direct link between Indian and global markets, Dalal believes that they affect the Indian markets with a lag. “There is a need to track the global market in addition to a whole host of domestic factors because there isn’t a single answer to a question on market movement,” says Dalal. It is here that backend support from research analysts at Merrill Lynch’s global base comes handy. When oil prices were going up, analysis from dedicated oil sector experts at Merrill Lynch helped in forming a view on the supply and demand situation, what could be the impact in the future and how they could affect inflation and interest rates? Dalal puts a great deal of emphasis on technical analysis which tells you a lot about the levels at which deals are done whether they are going up or down or whether you should follow the crowd. Says Dalal, “Calls should be based on momentum indicators and analysis. You cannot blindly follow the maxim, the trend is your friend.” He believes that if your basic assumptions are right, even if you have to go against the market ignoring what others do, it is justified. Giving an example, he says that the fund got its last three RBI rate hike calls right while some players were caught on the wrong foot. “Despite being a contra call we stuck to it as central banks worldover were following a tighter monetary policy and RBI had to follow suit to keep that gap between their rates and ours,” says Dalal. Even though markets have matured and are more sophisticated, greed and fear continue to dominate debt cycles. That is where experince counts and Dalal scores. “Experience adds value and my exposure to domestic and international markets has been useful,” he says. Dalal believes that time in the market will help you decipher when it is greed and when fear and take action accordingly. Since market movements are unpredictable, you have to be flexible in your approach. The markets were unidirectional between 2000-04 but after that there was a period of volatility. “We launched the floating rate fund towards the end of 2004 which helped investors protect their capital and at the same time offer yields equal to the prevailing rate,” says Dalal. While
the final decision rests with the fund manager, a consultative approach
to investments helps. Says Dalal, “When you match your opinion
with others you figure out how they interpret data and the mistakes
you commit while interpreting the same,” he says.
• HOME Business Standard • FUND MANAGER • October 2006 |
