Mr. Puneet Pal, Fund Manager, UTI Mutual Fund is an MBA from SIBM, Pune. He has been with UTI AMC Ltd. since July 2008. Prior to joining UTI AMC he worked with Tata Mutual Fund, Mumbai as a Fund Manager. He has also been associated with UTI AMC as an Assistant Fund Manager and as a Dealer during the period 2001 to 2006. Presently he is functioning as a Fund Manager.
UTI Mutual Fund is a SEBI registered mutual fund whose sponsors are State Bank of India (SBI), Punjab National Bank (PNB), Bank of Baroda (BOB) and Life Insurance Corporation of India (LIC). The UTI Mutual Fund had investor accounts of 9.87 million under its 83 domestic schemes as on June 30, 2011. The Average Assets under Management (AAUM) for the quarter of April– June 2011 of UTI Mutual Fund was Rs. 691.05bn.
Speaking with Hemant Maradia and Yash Ved of IIFL, Puneet Pal says “Inflation will peak out by the end of the calendar year, and thereafter interest rates are likely to be stable,”
What major changes have you seen in the Mutual Fund industry?
The Industry over the last few quarters has taken more initiatives on Investor Education. This is a welcome change.
These changes give investors confidence that we are moving in the right direction in terms of transparency besides enhancing the credibility of the Mutual Fund industry.
The scope of improvement is always there. As an industry, we are enhancing our own transparency; we are giving information regarding portfolio composition, performance and fact sheets.
What is your AUM?
Our debt Asset Management Fund (AUM) stood at Rs430bn, which include hybrid schemes as well.
Any New Fund Offers (NFO) in the near term?
We are planning to launch some New Fund Offers (NFOs) on the Debt side and are awaiting approval from the market regulator.
What is the outlook on the Indian economy?
The growth rate of the Indian economy, in the last three years, has held up well despite the financial crisis in the west but in reaction to the global financial crisis we pursued loose monetary and fiscal policy, which is now showing up in high Inflation.
In response to high Inflation RBI has been hiking rates in order to stabilize Inflationary expectations.
We expect GDP growth rate to be between 7.5-8% over the next two years and inflation at 9% over the coming months.
Inflation will peak out by the end of the calendar year, and thereafter interest rates are likely to be stable. Somewhere in the middle of FY12, depending on how the global economy evolves, there is a probability of rates actually coming off. We expect the Indian economy to grow slower going ahead.
How do you see the Liquidity situation in the country?
Liquidity has been tight for more than a year now. Going forward, liquidity will continue to be negative. We expect Liquidity to be negative (on an average) to the tune of Rs 50,000 crores for the next three months
Do you expect rate hike in the coming months?
We expect a 25 basis points rate hike in September or October 2011. The growth data around the world is not encouraging and in light of renewed growth concerns, we expect RBI to pause after a hike of 25 basis points.
What is your outlook on Certificate of Deposit and Commercial Paper rates?
We expect the rates on 1 yr CD/CP rates to range between 9.50%-9.80% over the next three months.
Your advice would you like to give to the retail investors?
The retail investors should consider aspects such as Investment horizon, risk appetite and returns.
Depending upon these parameters, the investors can choose amoung the various categories of Debt Funds.
Considering the current Macro economic situation, they should keep about 50% of their debt portfolio into long duration Funds, assuming a horizon of 1-2 years. Going forward we expect rate cuts to happen in FY12 and therefore expect Long Duration Funds to outperform amongst the debt category of Funds.
How many funds you currently deal?
I currently manage Bond, Gilt, short term income funds, and Ultra Short Term Funds.
The Gilt, short term income fund and bond funds are of longer duration, while Ultra Short Term funds are of shorter duration.