Deepak Sharma, Executive VP and Head-Investment Advisory Group of IL&FS Investsmart said mutual funds are sitting on 15-17% cash levels on an average.

He told CNBC-TV18 that a few thematic funds have been focusing on the largecap segment and may outperform in the coming future.

Excerpts from CNBC-TV18’s exclusive interview with Deepak Sharma:

Q: What are you hearing about mutual fund activity? What kind of cash levels are they holding onto right now?

A: Depending on the nature of funds, there are some close-ended and some open-ended. On an average, mutual funds are in the range of 15-17% cash levels overall.

Q: Who do you think might come out the winner after the first three months of uncertainty? Do you think it is going to be some of the niche thematic funds or is it just those who have stuck to a vanilla diversified?

A: It is very difficult to predict, as such mutual funds are not a product for three months or two months. It is a tool to save and create wealth over a period of time. But definitely, a few thematic funds have been focusing on the largecap segment and may outperform in the coming future.

Q: What is the call on IT funds at this point in time? We had some internal analysis suggesting that IT funds are underperforming the IT index. Do you think that streak of underperformance will continue or there might be an improvement there?

A: After 1999-2000, most of the IT funds have been converted into a diversified fund. There are very few funds still in the kitty, which are particularly focusing on IT alone.

Even in the IT set funds, there is a set of mix of stocks and it is not completely focused on IT funds.

Q: Tell us about the SIP format of investment. How would you compare that to a close-ended or an open-ended fund?

A: SIP is not a tool; rather it is a strategy and a very disciplined way of investing and saving. After PF or recurring deposit, this is the only tool which gives the investor access directly to the equity market and cultivates the habit of saving regularly over a period of time.

If we just compare high markets and low markets and if we just take last two years, which have been very exciting for markets, the SIPs have still outperformed one time investment in low markets.

Q: There were a couple of NFOs that opened last month and some thematic financial services, media and a gold fund as well. What have you heard about the kind of collections these funds have had?

A: The overall collections for the whole market have come to lower levels. But these thematic funds, whether it is a gold fund or media, are the ideas, which different fund houses try to create at the time of opportunities lying in the market.

Gold, as an asset class, has been recognized recently in a big way among the investors. The inflow on the gold fund has been superb. Similarly, media and entertainment sector has been doing pretty well and this is the idea that different asset managers are trying to encash and give opportunity for investors to invest and manage their funds on their behalf. 

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