The Wealth Company has begun its mutual fund journey with 4 simultaneous fund launches – a liquid fund, an arbitrage fund, a flexicap fund and an ethical fund.
Speaking about the fixed income part of the new fund house, Umesh says debt fund investors can expect 3 things from The Wealth Company – clarity, consistency and predictability from their investments.
Clarity starts from defining investor goals and ensuring that each product is aligned with respective goals. The fund house has defined 3 goals – stability, accrual and alpha – and bucketed all fixed income fund categories into these buckets.
Ultra short term range of funds are meant for stability, short term funds, corporate bond funds, PSU debt funds are all meant to deliver accrual with limited volatility while all duration oriented products are meant to deliver alpha from duration calls.
Umesh says you will never find a fund in the accrual bucket taking sizeable duration risks just as you won’t find stability bucket funds stretching average maturity in the quest for more accruals. True-to-label is what brings clarity to investors on outcome expectations.
The fund house is building capabilities across all 3 buckets – it does not want to be seen as a credit expert or a duration expert alone. It wants to be seen as a fund house that does a credible job across all 3 buckets through clarity of strategy, consistency of performance and predictability of outcomes.
Its fixed income philosophy and investment process are defined by the acronym EPOCH – which encompasses economic environment, pricing/relative value, optimal positioning, credit quality analysis and hedging/risk control.
Umesh’s interest rate outlook is aligned with consensus – the best part of the bonds bull market is perhaps behind us. From hereon, focus on accruals can be more rewarding that the quest for sizeable alpha from duration plays. That said, Umesh says tactical opportunities will keep presenting themselves from time to time – and he and his team intend capitalizing on them in appropriate strategies.
Speaking about liquid funds as a category, Umesh emphasizes the vast untapped retail opportunity that this simple yet powerful category offers to investors. Fund houses and distributors have a big opportunity to introduce liquid funds to every saver in the country – as a superior parking place for emergency funds and savings balances compared to low interest yielding bank savings accounts.