Above Benchmark

The firm says it is fixed income funds returned as much 27 percent when interest rates peaked to around 20 percent in early 2009 and then fell dramatically. Colombo stocks also rocketed 125 percent last year.

"The all share price index did 125 percent so compared to a very dynamic benchmark performing 125 percent up performance, most of the portfolios has done above the benchmark," says fund manager Bimanee Meepagala.

"Some of the larger portfolios have done as much as 138 percent for last year."

The firm says its high returns came from research and careful strategy. For large funds, liquidity matters.

"When we invest, we invest for the longer term," Meepagala says. "We look at company research how the valuations look and liquidity.

"Liquidity is a very important aspect because our portfolios prices are large so based on that liquidity is a very important aspect which we really stress on prior to investing.

For fixed income securities, the firm runs its own macro-economic model to predict interest rates.

Universal Banking

NDB Aviva Wealth Management is 51 percent owned by NDB and 49 percent by Aviva International Holdings of UK.

"This is an independently owned company, it is not owned by any families or individuals," says chief executive Prabodha Samarasekera.

"The people who works here are professionals and all client funds are independently managed and fair treatment is given across all portfolios."

The firm is now planning to launch retail plans which will be engineered so that savers can easily relate them to banking services.

Samarasekera says the group - with a bank, insurance firm, investment banking and stock brokering - is the closest Sri Lanka has to a 'universal bank' and its existing distribution channels will be used to push retail 'wealth management' plans.

Niche

"The way we will deliver our products would be through our banking channels as well as through our insurance channel. We are having discussions with both these areas," he says.

"These will cater to short term return oriented products to long term retirement saving type of products in terms of time horizon and spectrum."

By tailoring a product so that savers can easily relate to them - and compare with a bank deposit for example - the firm hopes to tap into gaps in the existing savings markets.

"I see the gap in terms of risk-to-return as well as tenor driven products not really meeting market expectations," says Samarasekera.

"For example there are products that are being offered by banks which are long term in nature but the clients are being offered short terms rates. One example is childrens' savings.

"Then also we see that return-wise these products are not really giving adequate returns. Maybe clients would like to take risks with some this money but banks are not in a position to offer the kinds of risks that these clients would like to take."

Samarasekera says concepts like unit trusts and fund management have not been well received by ordinary savers who found then complex and difficult to understand.

Probing Harder

This year, interest rates are set to rise. Meepagala says the firm's internal macro-economic model projects higher interest rates in the second and third quarters of this year though there will be no return to the high rates seen in early 2009.

But she is bullish on stocks. Last year after Sri Lanka emerged from a 30-year war, she says "everything looked cheap". Now it is not so easy.

"But the scenario has changed now and the stocks have also moved as you all know the all share index ran 125 percent last year," Meepagala says.

"So everything is not cheap now, so you will be able to get superior returns through superior research.

"So we will be stressing on research in 2010 to get superior returns."