Speaking on the launch of this fund and the thought behind it, Nimesh Shah, MD & CEO, ICICI Prudential Asset Management Company Ltd. said, “In the current scenario, where G-sec yields are at peak and macro environment turning conducive for propelling a fall in interest rates, there is a strong case for investments in duration funds. Indian markets are seeing a positive rally. The liquidity situation has improved in the recent past and with this fund, we aim to take advantage of the positive real interest rates that will lead to increase in savings rate.’
The fund will be managed by Rahul Goswami, CIO- Fixed Income.
Several opportunities in the offing for fixed income:
- There has been significant improvement in CAD over the past few quarters and India's BoP has swung back into surplus during the October- December 2013 quarter - supported by strong flows in debt and equity.
- Fiscal consolidation has received priority from the new government and is set to achieve 3% Fiscal Deficit target by FY17.
- Inflation is expected to ease off further in the near future.
- Real interest rates are positive after long time, which can lead to increase in savings rate; this will provide liquidity in the system which will be positive for bond yields.
- In the past, whenever 10 Year G-Sec yields were above its long term average, we have seen steep fall in the yields in the next 18 months.