AUM depletion due to mkt action not redemption: Sundaram MF

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Q: What would be your outlook on bond funds?

A: That is a key issue today, we are only soft peddling with the money fund and the liquid fund because there is hardly any volatility or mark-to-market issue there but if I look at a product like Sundaram BNP Paribas Bond Saver which used to be a flagship fund, now we are not able to market it aggressively for the reason that the gilt market has been very volatile. So at one time, the yield looks attractive, suddenly it goes into negative. I would say that interest rates are yet to stabilize.

So from that point of view, we are little hesitant to go the whole hog or aggressively market that fund. We need to wait for interest rates to cool down further, the ten year yields to drop to below 6 levels or stabilize around it before we can put them in the market. But till such time it is only the FMPs and the liquid funds which we are able to market.

Q: What general cash levels would you primarily be looking at deploying all this cash, would it be largecap space, midcap space, which are the funds that are sitting on most amount of cash and have you seen the inflow of Systematic Investment Plan (SIP) slow down significantly?

A: SIP has seen inflows, in the 2008, there have been very good inflows and in fact all the inflows were sustained by the SIPs but there is a small reduction which we have been seeing in the last three-four months, hopefully that should get corrected with the markets doing better. We were sitting at 20-25% cash at some point in time but then when we know that the markets are rallying or when we see that the markets are having short-term rallies, we need to put the cash back into investments. So we have been selectively putting into largecaps, into metal, into finance and some stock specifics as far as midcaps are concerned.