Mr. Kaushik Dani, Head – Equity, Peerless Fund Management Company, has vast experience in Fund Management, Investments and related areas for a period spanning across more than 15 years. He has served as the Equity Fund Manager & PMS Head in K. R. Choksey Shares & Securities Pvt. Ltd. His other engagements were as a Manager – Investments with Birla SunLife, Associate Vice President – PMS in Sharekhan, Senior Research Executive with SG Asia Securities (India) Pvt. Ltd. and as a Manager – Research Data with Motilal Oswal Securities Ltd.
Peerless Mutual Fund manages an asset base of $1bn and added 35,000 new retail customers. The company is sponsored by The Peerless General Finance India Co Ltd, a diversified business group with mainstay in Financial Services. Its distribution infrastructure comprises 147 branches and 69,889 sales agents servicing clients across 140 locations. It has an advantage of strong parentage support with a database of more than 8 million customers, which is expected to drive retail AUM growth in future
Speaking with Yash Ved and Poonam Chopra of IIFL, Kaushik Dani says, “We expect inflation to be between 7-9% over the next 6-9 months.”
How do you see the markets panning out in the coming months?
Typically CY2011 will be a difficult year not only for equity markets but also for some other asset classes. We had good positive returns for CY2009 and 2010. We have started the calendar year 2011 on a high base. So, the margin for error is very low. At best we can expect single digit returns for 2011.
Could you please throw some light on the stock selection strategy adopted for the Peerless Mutual Fund?
Broadly we have a top-down approach; based upon macro factors, sectors and themes. Based on global and domestic macros, we decide which sectors and themes would be good for investment. Then, we do further research within the sectors and identify stocks based on their individual merits.
Were the recent quarterly results as per your expectation?
The March quarter numbers gave a mixed picture. The revenues or topline for large part of the universe were more or less in line with expectations. We were anticipating some pressures on margin front, which was quite evident. Margin pressures were mainly on account of high input cost, which were related to high commodity prices and high wage costs. High interest costs added woes and put further pressure on the profitability.
Tell about your schemes. Any new schemes in the offing?
Currently, we have two hybrid schemes. Our flagship hybrid scheme Peerless Income Plus Fund has investments in Debt and Equity. We also have a recently launched niche scheme Peerless MF Child Plan. In this scheme, along with Debt and Equities, we also have investments into Gold ETFs. In the near future, we are planning to launch a diversified equity fund and next in line is an Infrastructure fund.
What is your outlook on gold?
Gold as an asset class should give decent yield. In dollar terms, we expect a 10-15% rise in the commodity over the next 12-18 months.
Where do you see inflation going ahead?
We expect inflation to be in the range of 7-9% over next two to three quarters. We don’t expect the WPI inflation to go down drastically. Food inflation is stabilizing, but the rate at which the manufacturing products inflation is going up, it’s a bigger concern.
Which are the sectors you are bullish and bearish on?
In the near term we are bullish on FMCG, Pharma and I.T. Over the longer run, we continue to remain bullish on Banking, Capital Goods and Automobiles.
In the current scenario, we would be bearish on Cement, Real Estate, Infra and telecom stocks.
What is your current Asset Under Management (AUM)?
Our current Asset Under Management stands at Rs 6500 crore.
How do you manage risk in your portfolio and what risk management techniques do you have?
When we manage portfolio, we give due importance to the liquidity and safety of portfolio. Picking quality companies adequately diversified among various sectors would reduce risk to some extent. We also give importance to valuations and margin of safety. In the current scenario, we have been cautious and consciously have chosen to have a large cap bias.
What is your advice to retail investors?
Retail investors should invest with a long term perspective if they want to enter into the markets at current levels. Consistent high and quality growth should favor India as compared to other Asian and emerging markets. The retail investors should invest with a minimum view of 2-3 years and preferably opt for a Systematic Investment Plan (SIP).