M R MURALI
LIC Mutual Fund, sponsored by Life Insurance Corporation, is one of the oldest mutual
funds in the industry. The fund manages a plethora of schemes numbering 38 including all
options. R Murali, the chief executive officer, is a qualified chartered accountant. He
has held various positions and responsibilities in LIC . In an interview with Capital
Market magazine, Murali shared his views on the performance of his
schemes and the current situation of the mutual fund industry. Excerpts:
The portfolio of LICMF Tax Plan seems to have concentrated only in a few New Economy
sectors. What are the reasons for the same? How are they performing with the recent
meltdown in the technology stocks?
The portfolio of LICMF Tax Plan is diversified. We have invested across consumer
durables / non-durables, media, pharma and telecom industries. Therefore, it would be
incorrect to say that we have concentrated our portfolio on a few New Economy sectors.
LIC Mutual Fund has got a number of tax planning schemes. Do you plan to merge them and
club them into one scheme?
Although we had a proposal earlier to merge all our tax saving schemes into one the
same has been dropped after discussions with SEBI as it is not feasible to complete the
modalities suggested by the regulator.
With UTI's Rajlakshmi Unit Plan controversy, investors seem to have lost faith in
children funds. LIC Mutual Fund also plans to launch a children fund with accident
insurance cover. How do you plan to project this fund to the investors in such a market?
We agree that the Rajlakshmi debacle has affected investor confidence. However,
considering the debacle in a positive light, we now have a situation where there is a
clear need for a savings product for the benefit of children, which we are about to fill
with the launch of LICMF Children’s Fund.
We plan to project LICMF Children’s Fund as the ideal saving for the future of
children, which is designed in light of the changed market scenario.
LICMF Children’s Fund is completely different from UTI’s scheme as it is
targeted as a savings option for all children. It is open ended, offering easy liquidity
and does not guarantee any returns. It encourages regular investment through its
Systematic Investment Plan and has additional benefits of a life as well as accident
insurance cover. It aims to achieve reasonable growth bearing in mind that safety of
principal will be of paramount importance.
Apart from this children’s fund, are you planning to launch any more new schemes?
Yes, we also have plans for a balanced fund, which will be launched when the market
conditions become favourable. We also have plans to come up with a liquid fund, a pension
fund and a Monthly Income Plan in the future.
With the prevailing low interest rate regime, do you plan to launch any serial plan or
fixed maturity plan that are currently in vogue?
Our policy has been to bring in fundamentally sound products for all market
conditions. With the perils of following the herd mentality made obvious after the debacle
of the sector funds, we stand by our policy of not launching any particular type even if
it is in vogue.
Are you planning equity related / sector related schemes?
We are planning both these kinds of schemes. However they are just in to nascent stage
and cannot be discusses.
What is the composition of retail and corporate investors in LIC Mutual Fund? What kind
of support does it receive from the parent, LIC?
Retail investments constitute over 90% of our total business, the balance being from
corporates and others. LIC has been very supportive, allowing us to share its vast human
resources, distribution networks, and even infrastructure.
How do you view the stock market in the current financial year? Do you see high
volatility in this year as well? What is your strategy in this market?
We see that the stock market is presently directionless. However, it should pick up on
signals of revival of the global economy. We feel that now is the best time for bargain
hunting. We are looking to purchase value stocks at the best prices.
Will options succeed in India and prove to be better hedging instrument than badla?
Options are definitely a better instrument vis-a-vis badla as is proved by global
experience. Apart from being extremely useful for hedging, they promote a healthy price
discovery mechanism, prevent price manipulations, are less volatile and have no delivery
problems. They also enforce greater transparency and liquidity. Though the take-off is
slow they should catch up in the future.
Now that a SEBI committee has recommended allowing institutional players in the
derivatives market, will you be trading in options and futures? How are you preparing
yourself for the same?
We look forward to options trading as it will not only help us to hedge portfolios but
also take advantage of market opportunities though not in the immediate future.
What are your plans in terms of improving your marketing strategies to enhance customer
service across different regions of the country?
One aspect of enhancing customer service is reaching out to as many investors as
We are expanding the number of our collection centers across the country. Of the other
aspects one is information disbursal .We are providing regular information on the
performance of our schemes through our newsletters. We are also providing easier access to
information regarding our schemes vide our web site. Another aspect is efficiency of
transactions. We are continuously trying to reduce the time lag required for all
Our aim is to provide satisfactory solutions to any investment problem of our
Comment on your investment in Cyberspace.
We had purchased Cyberspace in the secondary market and not through private placement.
Moreover, our investment in Cyberspace was liquidated at the right time and we made a
profit of Rs 50 lakh.