‘Fund managers prefer debt over equity’

The survey involved 23 global and domestic fund managers,including MFs and insurers.

With increasing volatility in the Indian equity markets,and high interest rates,fund managers believe debt may be a better option in short-term (3-4 months),according to a Fund Managers survey conducted by ICICI Securities. The survey involved 23 global and domestic fund managers,including mutual fund and insurance firms.

With an improved debt market outlook,compared to last three months,preference for income funds has increased to 43 per cent from just six per cent in May. 48 per cent of the fund managers believe G-Sec yields to remain around 8.20-8.40 per cent and 43 per cent feel yields to be in the range 8-8.2 per cent. None of them felt that the yields would be higher than 8.4 per cent.

Most believe markets will be in the range of +/-10 per cent from the current levels till the end this calendar year. In terms of market return for the rest of the year,global fund managers are more bearish compared to domestic fund managers.

Story continues below this ad

Most of the fund managers believe that the equity market valuations have come to a fair to undervalued zone. With more than 10 per cent correction in the last three months since the previous survey in May 11,most fund managers believe that valuations have turned more favourable. 35 per cent believe the Indian equity market is undervalued as compared to just 6 per cent in the previous survey.

As per the survey,most of the fund managers believe that allocation towards equity markets at current levels should be increased with an investment horizon of one year and above.