Friday, February 07, 2003 3:04:27 AM IST 
 
 
 
 
 
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LIC Mutual Fund
'Our aim is launch fundamentally sound products and not those in vogue’
        
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 possible.

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 transactions.

Our aim is to provide satisfactory solutions to any investment problem of our investors.

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.

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