Mr. Mahendra Kumar Jajoo - Head - Fixed Income
He has over 25 years of experience in the field of financial services including 11 years of experience in Fixed Income funds management. He is overall responsible for supervising all Debt schemes of the Mirae Asset Mutual Fund.
Prior to this assignment, Mr. Jajoo was Director with AUM Capital Markets Ltd. He has also been associated with organizations like Pramerica Asset Managers Pvt. Ltd., Tata Asset Management Ltd., ABN AMRO Asset Management Ltd and ICICI Group.
What is your view about the 2017 Budget? Do you think this budget will provide the necessary impetus in kick starting the investment cycle?
The budget focuses on infrastructure, agriculture and rural sector which in the medium term will support investment cycle. At present, in the short term, fresh private sector investment remains a challenge, though the budget has laid god foundation for an early revival.
The recent monetary policy stance of the RBI was seen by the market being a little hawkish. What is your view? What is your interest rate outlook for FY 2018?
RBI has now shifted its stance to neutral suggesting the bar for the next rate cut becomes very high. However, although the situation of a rate hike still is not visible at this point, expectations remain that global situation will stabilize in later half of the year allowing market rates to ease back.
Is the 4% inflation target realistic? What is your view on inflation given that commodity prices have hardened globally?
Rising commodities prices will have adverse impact on inflation though we don't expect inflation to spike too much as to cause any major concern. Given the sticky core inflation, 4% target would warrant further structural reforms which are underway but may take a little longer. As such, we believe a good monsoon and return of stability in global environment remains critical to achieving this target.
What is your outlook for the 10 year bond yield for FY 2018? Given that the 10 year yields are at 6.8 – 6.9%, how much scope do you see for yields going down in the medium term?
There is no specific target but our overall view remains that after may be rising a little more from current levels, yields should ease and close below the current levels by the year end.
Do you expect the Federal Reserve to hike the Fed Funds rate next month? How many rate hikes can we expect in 2017? What will be the potential impact on bond yields in India?
As of now we expect atleast two rate hikes. Needless it will put upward pressure on yields in India.
Do you think that the Indian Rupee is over-valued? What is your outlook on the Rupee for the next 12 months?
If the oil prices remains stable and FDI shows sustained momentum, INR should continue to be amongst the best performing currencies.
What is your fixed income strategy for the next 12 months? At what points (maturities) of the yield curve do you plan to invest?
Our strategy as always will be to continuously analyze evolving economic environment and economic data and reposition our portfolio in line with that resultant outcome. At present given the headwinds to bond yields and excess liquidity in the system, focus would be on high quality bonds in 2-5 years bucket.
Long term debt fund investors have made very good returns in the last one year. Will you advise them to remain invested?
Long term investors should continue to invest as India remains one of the strongest and most promising economy worldwide. Long term investors would be rewarded well only if they also are able to withstand the volatility and adverse moves in the interim on shorter horizons.
What kind of debt funds would you advise for investors, at this point of time?
Given the highly unpredictable and volatile environment we feel funds which has flexibility to realign portfolios with evolving environment are most suitable for now. With that objective, we are launching Mirae Asset Dynamic Bond Fund. NFO Starts from 3rd March.