Maturity funds: Year-end special: Double-digit returns cannot be ruled out from long maturity funds, says Sandeep Bagla of TRUST MF. | Jobs Vox

The Trust started its mutual fund business almost two years ago. I spoke to Shivani Bazaz of ETMTual Funds. Sandeep Bagla, CEO, TRUST Mutual Fund, to know how the fund house has been in the past two years and also their future plans. “In 2023, it will be difficult for speculative instruments like cryptocurrencies to make a comeback. Stocks have entered the overvalued zone by historical metrics. In debt, interest income is high, inflation is expected to slow, and if all goes according to plan, double-digit returns from long-maturity funds are not out of the question,” says Bagla.
Edited interview.

The Trust started its mutual fund business almost two years ago. What was the trip like?

As the economy reopened after the first wave of the pandemic, the Trust Mutual Fund launched its first scheme. There were logistical challenges as most investors and distributors worked from home and refused to meet in person. On top of that, our view was that interest rates would start rising soon as things normalized. Our first startup managed to raise Rs 580 crores, which was probably the highest NFO collection in the category.

Born in a time of crisis, we have built an organization of excellence from scratch, so the journey has been exciting.

Trust MF has so far launched five schemes, all debt schemes. Are you thinking of becoming a debt specialist?

We initially chose to launch a suite of fixed income products. Shares and hybrid plans are an integral part of any AMC product offering. We are planning to come out with equity schemes soon.

You manage relatively small AUM. What are your plans to attract more investors?

Fixed income markets have seen a sharp rise in interest rates and a sharp squeeze on domestic liquidity. In the last one year, the debt portfolios of all MFs have collectively lost Rs 2 crore. Swimming with the tide, we raised five funds and managed to do a great job. Most of the distributors start promoting AMC fund after seeing its performance for three years.

These are the first days of laying the foundation stone. We plan to increase our product offering to attract more customers. In the past, AMCs have been shown to experience hockey stick or J-shaped growth in AUMs after a certain corpus is reached.

Debt mutual funds have had a rough year. Rising prices, tight liquidity, talk of recession, etc. are keeping investors on edge. What is your view?

There is too much international liquidity, which causes inflation to rise. Unfortunately. As central banks raise inflation, the pace of global liquidity outflows has slowed. Recently, some inflationary pressures such as crude oil prices and labor market tightness appear to be lower.

As possible, in the short term, bond markets continue to rally. The long-term view is that inflation cannot be reduced easily without significant monetary policy measures.

Do you think the situation will be better in 2023?

In the year In 2022, equity markets witnessed an unprecedented rally. Cryptocurrencies have come down sharply from their peaks. Fixed income returns were low as capital losses ate into interest income.

In the year In 2023, it will be difficult for speculative instruments like cryptocurrencies to recover. Stocks have entered the overvalued zone by historical metrics. In debt, interest income is high, inflation is expected to decline and if all goes according to plan, double-digit returns from long-maturity funds cannot be ruled out.

Any plans to launch equity schemes in 2023?

In the year We plan to launch equity and hybrid plans in 2023.

New fund houses are distinguishing themselves. What is your strategy or USP?

The mutual fund industry has an oligopolistic structure, with little differentiation in product features. Most AMCs are full-service providers, offering comprehensive products. Our strategy is to ensure that our investment processes are robust, creating a fund house identity that delivers superior risk adjustments over the long term. For our fixed income, CRISIL is our strategic knowledge partner. CRISIL helps create our investment universe by screening issuers based on liquidity, quality and stability criteria. CRISIL creates a universe index which the fund manager follows as a guide post. Trust mutual funds follow limited active management, which aims to deliver consistent returns over a period of time. The structured and clear unique investment methodology should create a USP for AMC over a period of time.

Any special advice for ETMutualFunds readers?

Mutual funds are efficient vehicles that allow investors to gain exposure to various asset classes, providing convenience, transparency and liquidity at any time. The investor can benefit from the experience of current fund managers at a nominal cost. ETMutualFunds readers should take full advantage of the benefits offered by the mutual fund industry and make mutual funds their investment choice.