In an exclusive interview with Harsha Jethmalani of Myiris.com, Sanjay Sinha, chief executive officer (CEO), L&T Mutual Fund spoke about expansion plans of L&T Mutual Fund (formerly known as DBS Chola Mutual Fund), his stock picking strategy, outlook for equity and debt market.

Before joining DBS Cholamandalam Asset Management in September 2008, Sanjay was the Chief Investment Officer at SBI Mutual Fund. He started his career with UTI AMC (P) and was with them for over 16 years. He is an Honours Graduate in Economics from University of Delhi and a Post Graduate from IIM Kolkata.

>With options aplenty for investors and a good number of mutual funds available in the market, what differentiates you from other fund houses?

Strong brand, nationwide reach, proven track record, consistency of performance and innovative products should distinguish us from the crowd.

>Do you think it would be easy for your fund house to attract investors during this phase when the mutual fund business scenario is not the most welcoming?

While the challenge is daunting, it also presents an opportunity for an entity like us which can build alternate channels of distribution from scratch in addition to expanding through the conventional route.  The strong brand of our sponsors and their commitment to the business, coupled with simple products with attributes such as strong performances over the last 1 year and transparent portfolios should endear us to a large base of potential investors.

>Could you share your expansion plans for next couple of years? Where do you see L&T Mutual Fund three years down the line?

We have expanded from 19 to 34 locations in the span of the last few weeks. We intend to be in 41 locations in the next 1 month and 56 by June. We will then consolidate our base. We expect to see ourselves in a leadership position in 3 years and emerge as one of the most admired asset management companies in India.

>How do you see flow of funds in mutual fund industry for FY11?

Retail interest seems to be coming back into the industry. Distributors who had moved away from MFs are also back. Both these factors should augur well for the industry. However, if the markets remain volatile for extended periods of time, investors may once again move away given that the memory of the crash of 2008 is still very fresh. There may be a lot of initiatives taken to add depth to the bond markets and this may open up new opportunities for retail investors.

>What is your take on ongoing debt crisis in Europe? Do you think it as a major concern for global markets?

Greece may not be the only flashpoint in Europe. Other nations such as Spain, Portugal and Italy will also keep the world on tenterhooks. UK not only has a historically high deficit to deal with but the imminent elections in May also have the potential to throw some odd surprises.

>How do you see India Inc`s performance in FY11?

As per consensus earnings estimates of various analysts, EPS for FY2010 is expected to ~850 and that for FY2011 is expected to ~1050, which translates into 23% earnings growth.  

>What do you look for in a stock before taking a buy call?

We conduct thorough fundamental analysis to identify the stocks for investments. We also consider growth prospects, absolute and relative valuation of the stocks as well as quality of management. The fair value arrived at is compared with risk weighted returns from current market prices to arrive at investment decisions.

>Will 2010 be a year for equities?

With growth momentum getting stronger and more broad-based (both locally and globally), we believe equity would deliver superior return compared to other asset classes.

>What is your outlook on debt market?

We expect short term rates to remain firm during the year on the back of tightening cycle initiated by the RBI. Long term rates would rise during the first half mainly on the back of negative sentiments regarding inflation and supply of government papers. The long term rates would, however, come down during the second half as higher economic growth would enable the government to withdraw the stimulus package and improve its finances.

>According to you, which sectors will likely to perform better in 2010?

We believe capital goods, power and consumers related (both durables and non durables) sectors would deliver better returns during the year 2010. We have a contrarian call on IT sector as we believe that with recovery gathering pace globally, business volumes for the sector would pickup offsetting the concerns of rising rupee.