Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
'In the forthcoming budget we expect distribution tax on dividends to be withdrawn' - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Feb 19, 2001

    'In the forthcoming budget we expect distribution tax on dividends to be withdrawn'

    In Vivek Reddy’s own words, ‘he is the first employee of the first private sector mutual fund in India’. Kothari Pioneer Asset Management Company (KPAMC) owes much of its success to Vivek Reddy, its chief executive officer (CEO).

    Vivek Reddy has pioneered many a concept, the most important being that of daily net asset value (NAV). He also set the ball rolling by launching a slew of sectoral funds (IT, pharma, FMCG) that was later aped by other Asset Management Companies.

    Under his able stewardship KPAMC has emerged as one of the most profitable and front-running Asset Management Companies in the country. An engineering graduate and an MBA from the University of California, Vivek Reddy was a management consultant in Los Angeles for four years prior to heading KPAMC.

    We have interviewed Vivek Reddy in the past and this time around it was more of an update on emerging trends in the mutual fund industry, and our queries revolved around the initial public offering (IPO) scene, budgetary expectations and the brief rally that we are witnessing currently.

    PFN: There is a firming up in prices of software stocks. There is a gradual 'delinking' between Indian stock markets and NASDAQ. What do you make of these developments?

    Mr. Reddy: This was bound to happen. As we had been maintaining all the while the dynamics which guide the US and Indian technology stocks are different. With a slowdown in the US economy and fears of a cutback in global IT spending, tech majors in US have announced scaled down growth forecasts which has resulted in NASDAQ plummeting. On the other hand, the prospects for Indian technology stocks continue to be good as they move up the value chain and benefit from increased outsourcing by U.S firms in search of more cost-effective providers.

    PFN: What are your expectations from the budget for capital markets and the industry?

    Mr. Reddy: Our expectations from the budget are

    • concrete measures to reduce the fiscal deficit
    • spurring economic growth through infrastructure spending
    • pushing reforms ahead to attract more FDI flows and to take PSU divestment to its logical conclusion
    • provide further fillip to exports

    Among the steps the budget could take to stimulate the capital markets are :

    • withdrawal of distribution tax an dividends declared by mutual funds and corporates
    • enhancement of the Rs.60,000 limit under Sec88; also removal of sub-limits under Sec 88

    PFN: Increasingly fund managers are seen taking a very short term view on stocks. Do you subscribe to such an investment style? What is your investment horizon for stocks?

    Mr. Reddy: It is typically speculators and traders who take a short term view on stocks. Professional fund managers like us always keep in mind the investment objective of the particular scheme while formulating the investment philosophy. While long term investing is what we adhere to, one need to keep in mind the systemic changes, which affect the returns of the scheme. We tend to have a medium to long term view on equity investing and urge our investors to do the same.

    PFN: At this point of time when stock markets are showing glimpses of a rally and the budget is a few weeks away, what is your advice to the mutual fund investor?

    Mr. Reddy: We feel that the investors should keep their individual financial goals, risk preferences and time frames in mind while investing rather than short term phenomenon like a rally or budget. Having said that, we feel that the investors should look to have a portfolio, which is diversified not only across sectors but also across asset classes. While the asset allocation depends on the individual risk preferences and time frame, we feel that a 70:30 allocation between equity and debt should be ideal for most investors.

    PFN: The mutual fund IPO market has been witnessing a lull for some time now. What are your views on this?

    Mr. Reddy: Don’t be surprised if you find activity levels picking up in the mutual fund IPO market. If the number of offer documents filed with SEBI are any indication, we could see a lot of action here. But do keep in mind, as the mutual fund industry matures and the players complete their line up of products, IPO market become less important as fund houses concentrate on building their assets in their existing schemes.

    Click here to read our previous interview with Vivek Reddy.



    Equitymaster requests your view! Post a comment on "'In the forthcoming budget we expect distribution tax on dividends to be withdrawn'". Click here!


    More Views on News

    The Right Financial Advisor Is Around the Corner (Outside View)

    Mar 10, 2016

    An opportunity to find an impeccably trustworthy and competent financial guardian is in the offing.

    Why financial planning should be dull and boring (Mutual Fund Corner)

    Feb 29, 2016

    Most financial planners come out as whiz kids who throw around financial jargon. But financial planning can be actually easy, provided one follows a disciplined approach.

    What Are E-Wallets And How To Use Them (Mutual Fund Corner)

    Feb 12, 2016

    PersonalFN highlights the benefits of parking a portion of your expenses in e-wallets and using them efficiently.

    Is Consumption Boom Over In India? (Mutual Fund Corner)

    Feb 2, 2016

    Mutual funds take a bearish call on the FMCG sector. The sector has started playing out due to a combination of slower growth and expensive valuations.

    How to Find a Saint Amongst Sinners? (Mutual Fund Corner)

    Feb 1, 2016

    Ethical practices help build long lasting relationships, and healthy long-term business relationships are often mutually rewarding. But PersonalFN is of the view that the financial services industry in India seems to have forgotten this.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms