Words of Wisdom:

"I know I am but what are you?" - Diane

Dsp Blackrock

  • Date Submitted: 02/27/2013 10:38 AM
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DSP BLACKROCK
We follow a top-down approach while managing fixed income assets. We make investment decisions after studying a host of factors, such as macro-economic indicators, the RBI's monetary policy bias, government's fiscal policy, inflation trajectory in the near term, systemic liquidity in the banking system, current account deficit, and demand-supply dynamics in the bond currency market.

We also pay attention to global macro-economic developments and trends in the key commodity markets, which may have an impact on India's balance of payment mechanism in the medium term. These factors give us an indication on our likely position on the interest rate cycle.

My attitude to risk...

We believe that risks and returns are two sides of a coin and that it is not possible to generate a high return with low risk in the portfolio. We believe in incremental risk from the fixed income portfolio's perspective. So, before making an additional investment, we consider the incremental return we are likely to generate and the risk we are adding by purchasing an asset. If the risk-return trade-off is in investors' favour, we consider adding risk to the portfolio after a careful review of other relevant factors.

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Investors should also ask a similar question while making an investment decision in fixed income schemes. A suitable question would be: how much incremental return will I be likely to generate over my investment horizon compared with that generated by liquid funds?

Since the latter are considered to offer low return at low risk, an investment in funds with higher risk should generate suitably higher returns than plain vanilla liquid funds. If the expected returns are not commensurate with higher risk, the decision should be re-evaluated.

My best & worst investment decisions...

We take investment decisions on behalf of our clients almost on a daily basis. This is done after a careful study of relevant factors and their expected outcomes in the near term...

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