Asset allocation: $38 billion fund manager says asset allocation that hurt stocks is reversing

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NEW DELHI: Market veteran Un Balasubramanian says the interest rate-driven asset allocation that had hampered flows into equities globally is now reversing and would keep sentiment intact in India.

From India’s perspective, says Managing Director and CEO of

a likely good monsoon, an approaching holiday season, expectations that the country will outperform global economies, and could also see steady flows, will keep investor sentiment upbeat.

Balasubramanian, who oversaw Rs 3.07 lakh crore (or $38 billion) in average assets during the June quarter, said global interest rates had risen in line with expectations and bond markets were discounting primarily future moves, as evidenced by bond yields, and that there is a growing sense of slowing growth, which has moderated expectations of aggressive interest rate hikes.

Balasubramanian says India Inc is making constant efforts to strengthen balance sheets and learning to resist price pressures.

Companies are managing their balance sheets more effectively today and that was evident in last quarter’s results when the numbers far exceeded analysts’ forecasts, he said while expecting the trend to continue. sue for at least a handful of Nifty50 companies in the future.

Balasubramanian, who has three decades of experience in the MF industry, said there are companies that have raised their prices; there are others that maintain inventory taking into account cost and margin inflation and there are also companies that manage employees profitably. He thinks there could be a marginal surprise on the earnings side in some sectors over the next two or three quarters.

“There has been an upturn in consumer demand over the last month and a half and in general spending in different parts of the country. Companies have also increased prices and passed some costs on to consumers. companies in a few sectors to surprise on the positive side,” he said in an interview with ETMarkets.com.

Investment Mantra

Balasubramanian has been with Aditya Birla Sun Life AMC since 1994. Prior to assuming the role of CEO in 2009, he served as Chief Investment Officer at MF House from 2006 to 2009. He also oversees global mandates through the through its subsidiary in Singapore and Dubai, in addition to supervising alternative investment funds, real estate and PMS.

Balasubramanian says that having been in the MF industry for decades, the key to success, according to him, is to be “optimistic”. He prefers the term “optimism” to “bullish”. He said to think about making investments from a decade perspective and not read too much into the volatilities in between.

“Every investment I make is long-term. It takes discipline to have conviction, to stay bullish and to view MF investments as a long-term vehicle. While we can all be bullish, the market will ride through volatility and the only way to deal with such phases is to make regular investments,” he said.

Blip in MF entries

Flows to equity programs fell 42% to a nine-month low of 8,898 crore rupees in July, but Balasubramanian, who is also currently chairman of AMFI, is unaffected.

He says acceptance of mutual funds among investors is on the rise. Building a longer-term portfolio has been the basic advice of mutual funds, and the money coming into MFs today, he believes, is more of a “long-term” nature.

He said that while the pace of flows will vary from time to time and movements in interest rates or alternative investments may put the brakes on some investments, the broader positive trend will continue.

(Disclaimer: The recommendations, suggestions, views and opinions given by the experts belong to them. These do not represent the views of Economic Times)

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