Sun F & C Mutual Fund To Focus On B1 Scrips
Business Standard: What will be the focus of the new mutual fund scheme being launched by Sun F&C?
Nikhil Khattau: Sun F&C AMC will, within the next two weeks, launch an open-ended equity fund which will invest in about 20 to 40 value stocks. The fund will have a minimum target of Rs 1 crore. The AMC has already received Sebi approval for launching the fund.
BS: What would be the main features of the fund?
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NK: This is a no load, value-stock based index, which will focus clearly on the equities segment. The fund will look into stocks which are illiquid and relatively cheap but show good upward potential and marginal downward risk. They would be largely from the B1 group of stocks. The fund will open for fresh sales and repurchases for 15 days every three months. This structuring has been made so as to be able to meet the redemption requirements since its investments may take a little longer to sell and generate cash.
BS: What is the rationale behind launching an equity-linked fund? Do you see a turnaround for the equity segment?
NK: We are not market timers, in the sense that we would not blindly follow the market trend. It is true that debt issues were the favorites but in the short term, as interest rates come down, equities will begin to look favourable. The requirement for a fixed return through a debt instrument may well be behind us.
BS: Despite the positive signals through the union budget, the credit policy and the easing of political tension, the FII inflows have not come in a big way over the past few months into the Indian markets. What would be the main factors behind this?
NK: We have seen the liberalisation process over the past 5-6 years. It would not be proper to term India as an emerging market. It is an insular but well developed market. The US markets have shown unprecedented returns over the past months, which has resulted in US-based investors not looking elsewhere across other markets. The FIIs would come when the genuine returns are made at the markets here. There are pockets of value in the Indian capital market and when we talk of value stocks, these include turnaround stocks, illiquid stocks and those which are not touched by the market.
BS: What will be the other products which Sun F&C will launch during the current fiscal?
NK: We will introduce a family of products in the coming fiscal year which could include a fixed income fund. The possibility of a sectoral fund also cannot be ruled out. It is to the advantage of the investors that we provide a complete range of products
BS: What would be the size of funds managed by Sun F&C at this moment?
NK: Sun F&C currently manages assets worth $300 million in India and had introduced an open-ended India fund through a Luxembourg-based India investment company.