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Investments should be diversified across assets, says Nimesh Shah of ICICI Prudential Mutual Fund

Updated : June 13, 2019 05:56 PM IST

Nimesh Shah, MD and CEO, ICICI Prudential Mutual Fund discusses recent earnings for the mutual fund industry.

Shah said: “There are various kind of funds and each fund is very independent of the other and every fund has got a mandate and mutual funds stick to that mandate which is there in that fund. So when an investor is coming in he is coming with the mandate. The regulatory framework of the mutual fund is so strong and we are so very well regulated that our investor should be assured that if he is coming with the mandate we say that mutual funds are subject to market risk please read the scheme information documents properly so that scheme information documents is what we are guided by. Those documents contain everything what that fund can do.”

He added: “As far as Mutual funds are concerned within that framework we invest in AAA bonds, AA bonds, A bonds, all kinds of bonds we invest. So each fund will have clearly specified what is the credit profile that they are getting into.”

Shah continued: "Concentration risk on the asset side and concentration risk on the liability side also — so first thing well diversify your instrument. There are clear Sebi (the Securities and Exchange Board of India) guidelines about how much we can put in one asset. What is the other problem so like people have understood that you should not take too much exposure on concentrated asset side but another important area for investor to look at is are the liabilities concentrated. A well-diversified fund house would have people from all across the country into it, from all segments of the society and will not have chunky investors. What we try and see that in a credit risk fund you don’t have big institutional investors, you have various small investors across the country so that ensures to that extent your assets don’t get eroded.”

“Advance against shares is the business that we as an AMC have been doing since a long period of time. I have not had a single negative experience still now in advance against shares. I believe even in Zee one has to see as you are saying that Zee is the exposure, yes is there an issue today, yes we had an issue in JSPL also. There was never a single day delay for us in JSPL but headlines were all over we have to worry about not only resolving a case, we don’t get that time because when issues happen in India since it is not a liquid market we don’t have a junk bond market. Even if I want to sell today I can not sell," said Shah.
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