As far as the debt markets are concerned, we believe that the rate of decline in interest rates will now slow down. Interest rates have come-off significantly and we don’t believe they will come-off significantly from current levels.

However, we don’t believe they will go up too much either. Interest rates, therefore, are likely to be rangebound in the near term. Therefore, investors would have to settle for much less in terms of returns than what they have seen current year-to-date. The returns have been good, largely because of the capital gains that have accrued because of the huge decline in interest rates. If capital gains are going to decline, the overall returns are likely to reduce as well.

As regards equity markets, we believe that it is very difficult to try and time the markets consistently especially with a short-term perspective. We don’t even believe in trying to predict indices or where the markets are likely to be in the near future. But, what we do believe in is that valuations are extremely attractive, even if you look at it in historical terms. In terms of growth we are seeing that whatever visibility we have in terms of the GDP is going to be attractive. If you look at one year forward PE’s the valuations of the Sensex stocks are also good. And therefore, we believe that, selectively, on a purely bottom-up approach, there would be many stocks that would be attractive at these levels. And therefore we believe it is a good time to invest.

However, any investor must necessarily have the patience required to benefit from equities as an asset class.

I would tend to believe that the Mutual Fund industry is doing very well. Mutual Funds have to provide very good service standards, performance and transparency. And I believe the industry has scored highly on all three.

Our performance is there to see. I would tend to believe that the performance has been good and consistent across all our funds.

In terms of our investment philosophy, starting with the debt market. We don’t look at it only as a returns-oriented business we look at it in terms of risk/return. People tend to believe that debt market means no risk. That is a fallacy. There are three types of risks -- credit risk, interest rate risk and liquidity risk. We have to address all these issues while building a portfolio.

For example, people tend to say that it is a very high credit quality portfolio without paying ample attention to either the duration or the weighted average maturity of the portfolio. I think one has to take great care to take all these three risk into account when one is building a portfolio. Everyone talks in terms of a 75-80 per cent AAA (triple A) portfolio. Nobody looks at the price risk.

In terms of the equity markets we have a very consistent bottom up philosophy. We are very focussed in terms of investments. Our diversified funds are well diversified. We have stuck to our guns right from the beginning.

It is a question of what you define as right now. People tend to think that equities give returns in one-two months. One has to understand one basic concept while investing in equities. When you invest in equities you are investing in the underlying business. Ask any businessman and he knows that he does not get a one-two month return in any business. Businesses follow their own cycles and have their ups and downs and if you invest in a business then you must have the patience to reap the benefits from those businesses. And equities being representative of that underlying business should be no different. One has to look at it in that perspective to derive benefit out of it.

Again if from a long term point of view if one does believe that the Indian economy is going to continue to do well I don’t think one can have any doubt about the capital markets doing well. When you say the capital market is going to do well, an Index fund is going to do well. It hasn’t in the past in the last few years, but again one has to take a slightly longer view.

We are primarily bottom up approach investors. We really look at it very stock specific. So it would be very dangerous to generalize sector wise. But I would still tend to believe that sectors like cement and even IT services would continue to do well.

First, don’t believe that there are no risks in mutual funds even if investors choose only debt funds because investments are always a risk/return business. So be prepared for that, there is no such thing as risk-free. Every thing has a risk. It is a question of risk/return and that must be assessed and digested very well, because it is only then that an investor can actually pick and chose what type of risk/return suits his or her profile.

Secondly, it is patience that has to be involved with certain asset classes. You cannot invest in an equity fund and hope to make money in a three months or even a one-year time frame. It is too short, simply because of the reasons I mentioned earlier. You have to have a longer time frame. Therefore, you must have the luxury of that time frame.

Also investors must be prepared, if they believe that if X is a good time to invest and nothing has fundamentally changed, the economy looks good, the companies looks good, then they should be prepared to average downwards. Instead of looking at it as an opportunity investors generally tend to panic. In fact, it should be the other way round and investors should take this as an opportunity to average downwards and bring down their acquisition cost.

Investors, therefore, must understand their own risk profile, have patience, look to take advantage of market dips to average their investments and look to invest at regular intervals rather than invest large amounts in one off transactions.