James Leighton, managing director Asia Pacific, Merrill Lynch Asset Management (Hong Kong), feels that the underlying sentiment in the Indian market is still bullish. ``The long-term view of the Merrill Lynch AMC is that the Indian markets will grow and expand,'' he adds unperturbed by the political developments.

According to him, apart from the political hic-ups, because of which the capital markets have seen a correction of around 15-20 per cent, investors who take a long term view will get good returns as compared to short-term returns.

"We have seen anumber of instances of uncertainty and volatility in emerging markets and other places. But it is important to separate politics from economics of a country. Our focus on corporates leads to effective use of capital and help us in achieving positive returns,'' remarks Leighton.

Leighton, who was here on the occasion of the launch of DSP Merrill Lynch AMC's balanced fund, points out that the assets under management is expected to double, exceeding Rs 1,000 crore by the end of December 1999 from Rs 518 crore as on March 31, 1999. Further, the AMC expects to double the size again to Rs 2,000 crore by the end of the subsequent year, 2000.

``We also plan to explore the opportunities to launch sectoral funds and funds focussed at institutional pools of money. This we plan to launch only if there is enough demand from the end-users.'' At Merrill Lynch, the philosophy behind launching new products depends on the demand for the product and the size of the funds. "A meaningful size of the product leads to economiesof scale and the returns are even better", says Leighton.

DSP-Merrill Lynch AMC launched its first balanced fund which will be open for initial subscription from May 3 to May 14, 1999.

According to the chief investment officer of DSP Merrill Lynch AMC, S Naganath: "In the portfolio of every asset management company there needs to be four building blocks and with the launch of the balanced fund, the DSPML AMC has completed its family of funds spanning the entire risk-return spectrum and to cater to all the needs of investment community".

"This is a very appropriate time to launch the product as the times are volatile and it would be prudent for investors with lesser risk capability to invest in the scheme. We intend to keep the equity exposure in the balanced scheme above 50 per cent of the assets of the portfolio to avail of the tax benefits given in the budget to open-ended equity schemes,'' says Naganath.

Speaking on the rationale to launch a balanced fund, chairman DSPML AMC (India) HemendraKothari, says: "We will continue to devise schemes which are relevant to the changing investment needs of different segments of investors. The various features of the balanced fund, including the load structures, have been designed with this in view". Naganath stated that 25 per cent of the assets of the balanced fund would be invested in the three growth sectors of pharma, information technology and fast moving consumer goods. Apart from this, he plans to invest at least half of the mobilised assets in cyclical value stocks. "There are early signs of recovery in the economy and thus we plan to give equal weightage to cyclical as well as growth sector stocks", he adds.

Leighton said that the Indian mutual fund industry shows enormous promise and with the private sector mutual funds companies joining in the efforts to educate investors, they should reap good benefits in the medium to long term.