Mr. Maneesh Dangi
Co-Chief Investment Officer - Aditya Birla Sun Life AMC Ltd.
As Co-Chief Investment Officer, Maneesh Dangi spearheads Fixed Income investments at Aditya Birla Sun Life AMC Limited. With close to twenty years of rich experience in Finance and Research, Maneesh leads a team of twenty-two, comprising fund managers and analysts, managing over INR 1.6 lakh crores.
Maneesh has been with Aditya Birla Sun Life AMC for over a decade now. He manages funds such as ABSL Banking & PSU Debt Fund, ABSL Corporate Bond Fund, ABSL Credit Risk Fund, ABSL Medium Term Plan, ABSL Short Term Opportunities Fund, and ABSL Dynamic Bond Fund.
Maneesh is an MBA in Finance and FRM.
1. With the GDP growth figures being at six-year lows, do you feel that more rate cuts? Assuming a rate cut happens in December, do you feel more cuts can be expected in future?
Answer: In a surprise move, RBI kept policy rates unchanged after having cut consecutively since February 2019. Importantly, all six members voted for a pause in contrast to both market expectations and previous three meetings, where all the members had voted for cut. However, MPC kept alive hopes for further cuts, recognizing monetary policy space for future action and continue with accommodative stance as long as it is necessary to revive growth but while ensuring that inflation remains below target.
In a situation when growth slowdown looks more entrenched and underlying core inflation has slumped to sub-3.5% amid widening output gap, it would be premature to call it the end of rate easing cycle. However, the emphatic 6-0 vote for status quo despite the sharp growth slowdown suggest consensus in the MPC regarding the primacy of headline inflation as its mandate. Given the sharply rising food inflation, February policy should be a status quo given our expectation of higher inflation in December (last reading before next policy) and possibility of fiscal slippage in the Union Budget.
2. With the rate cuts not getting transmitted to the borrowers, what more do you feel the government should do to boost investments?
Answer: Monetary policy transmission had been low but is improving in money and corporate bond
markets and partial in G-sec markets. However, in credit market transmission remains delayed. Transmission in bank lending rates have been muted especially in outstanding lending rates. We believe that balance sheet stress faced by financial and corporate sectors is a key reason for the slowdown in investment. In our view, government is aware of the issue and is working to resolve the stress. Government would also need to continue crowding in investments by continued focus on public investments, particularly in infrastructure sector.
3. Could you share some light on your investment /due diligence process for ensuring only quality papers are selected?
Answer: Click here for answer
4. What are the current challenges faced by the debt markets? What policy changes would you suggest to overcome them?
Answer: Liquidity in corporate bond markets is a challenge. Our recommendations to improve liquidity, some of it already already work in progress are:- 1) Create a centralised counterparty for corporate bond repo. 2) Make highly rate corporate bonds eligible for RBI repo, 3) Electronic trading platform which is a work in progress would also help in improving liquidity.
Moreover we believe that banks should be incentivised to convert their loans into securitised assets.
Another suggestion would be creation of a credit registry which would help in improving transparency and price discovery. Improving tax treatment of bonds would also help in incentivising debt markets for investors.
5. Can you share some insights on the recent investment trends of foreign investors /FIIs in debt markets?
Answer: Foreign flows into Indian Debt capital market remain subdued during CY2019 despite the various efforts made by the Govt and RBI to ease access of Indian debt markets by foreign investors. In addition to the General Route via set limits, in May 2019 RBI announced Rs 54,606.55 cr limit under Voluntary Retention Route (VRR) to attract patient capital with a retention period of 3 years. However only 63% of the VRR limit has been utilized while the utilization of limit for Corporate bonds under General route remains at 60% and that for Govt. securities is as low as 50%. During the beginning of the year, the general election results remained a concern. Despite RBI’s efforts of reinstating system liquidity and delivering 135bps policy rate cut during the year, global uncertainty driven by US-China trade dispute, concern on fiscal health of government along with liquidity and solvency concerns around certain NBFC has kept the foreign investor in wait and watch mode.
6. What you be your advice to investors looking for medium to long term horizon in debt funds?
Answer: Given the uncertainty in both duration and credit, short end AAA bond continue to be the place to be as they provide reasonable accrual without credit risk and manageable duration risk. Investor with medium to longer horizon can consider Corporate Bond Fund and Banking & PSU Fund categories.
The views and opinions expressed are those of the Mr. Maneesh Dangi, Fund Manager and do not necessarily reflect the views of Aditya Birla Sun Life AMC Ltd (“ABSLAMC”) /Aditya Birla Sun Life Mutual Fund (“the Fund”). ABSLAMC/ the Fund is not guaranteeing/offering/communicating any indicative yield on investments.