'We Have Always Planned Our Growth Realistically And Have Been Achieving Them Year On Year'
In an interview with BW Businessworld, Swarup Mohanty, CEO, Mirae Asset Global Investments, talks about direct investment platforms, SIP, Mutual Fund investment and more
Swarup, congratulations on the attainment of Mirae's 10-year landmark! What, in your opinion, has been your biggest hits and misses so far?
Thank you so much. Completing ten years of fund management in India was the first landmark of our journey in India and we are all very happy with our journey so far. The consistency of performance which our funds have demonstrated, especially our 2 flagship funds - Mirae Asset India Equity Fund and Mirae Asset Emerging Equity, has to be the highlight of our journey. It is due to this that we have been able to build a very strong SIP book for our business. This would help us greatly in the future.
I am also very happy to state that most of our key personnel have been with us since inception too. That adds tremendously to the stability of any organization. We have always planned our growth realistically and have been achieving them year on year. We feel we now have built a strong platform for our future business.
Broadly speaking, what is Mirae's strategy and focus areas over the next couple of years? Are you looking to add any new products to your portfolio? Will your focus be on direct or regular plans?
The next five years would be dedicated to building on the strong foundation that we have laid down for ourselves now. We would continue our journey of strengthening our existing products to enable investors to have a good investment experience with us. We do believe that the investor's investment experience is key to our future and we would strive hard to fulfil this for all our investors.
At a broad Asset Management level, we have been working on diversifying our Asset Classes for the last two years. We now manage over 3800 crore in Debt and we want to build on that considerably. We also want to be in the passive space through ETFs towards the end of this year. We do believe that in the years to come passive investments would become a reality and we would want to build a robust business there too.
Last year we successfully raised 500 million from overseas investors in Mirae Asset India Midcap Equity Fund (SICAV platform). This has added a new dimension to our business. Managing the expectation of global investors will add immensely to our fund management capabilities and we look forward to building this business in the coming years. We are also in the process of setting up our AIF business and we are all set to launch our first product-Mirae Asset Credit Opportunities fund dedicated to the Real Estate space. As you can see, we are in the process of graduating towards a fully diversified Asset Manager and would like to showcase our Fund Management capabilities in all asset classes in the times to come.
We are looking are building on our product basket on the Equity side of our business too. At the moment we feel very strongly about the prospects of the healthcare theme. We are launching the Mirae Asset Healthcare fund on the 11th of June. This is a broad theme which aims to invest in the growing opportunities in the Healthcare space. We are confident of the long-term prospects for investors in this fund.
We see the beginning of the RIA (Registered Investment Advisor) business in India which would lead to the growth of the Direct Plans through this route as well. We have always believed that investing in Financial products needs advisory and we see growth in both advisors and distributors in the coming times.
Do you think the industry is equipped to deal with an extended time correction in both equity and debt markets? Anecdotal evidence suggests that a lot of investors - especially news ones - are already starting to get iffy…
We have seen that investors are comfortable buying Equity when the markets are stable and high. As a result, the investment experience has not been up to the mark. We all know that it is not the behaviour of the market that leads to the investors wealth, but it the behavior of the investor in the market which leads to actual wealth creation. It is high time the investors understand this and change their investment behaviour accordingly. We have enough data from the industry to showcase the fact that when investors have withstood the volatility of the market and remained invested they have created significant wealth. In volatility lies the opportunity. Indian economy in on the growth path which would always reflect in the stock market. The investors should redeem only when their goals are achieved not try to predict markets and sway away from their path.
With a number of free + direct investment platforms now emerging, is it safe to say that the next wave of disruption in MF distribution is underway? Does this not threaten brick and mortar distributors? Are free platforms that "commoditize" mutual funds good for investors in the long term?
I do believe that Mutual Fund expansion would happen when the product gets commoditized. When investment becomes a habit, disruptive growth will happen. We have already seen some degree of that happening in the SIP investing and that has now lead to significant growth in a short period of time. I also believe that different investors cater to different investment avenues. We do not see any threat to any particular mode, in fact, we see growth in all areas. With the growth in financial literacy, we see growth in the overall investment climate of the country and there is scope and space for everyone to grow.
We do believe that technology would be the key driver to the way investment is done in the future. We at Mirae Asset are already a beneficiary of this. Nearly 49% of our folios are digital in nature and in that aspect we are unique in the industry. We see this trend increasing much quicker in the coming times.
The recent passing on off TER reductions to distributors has resulted in a fair degree of angst within the community. What are your thoughts on that?
In any trade, costs would one aspect which would be under constant scrutiny and we are no exception. Diminishing margins are a fact of most businesses. When I was young a Mumbai - Delhi airfare was Rs.15000 one way. Today we feel a Rs.6000 fare would be expensive. In that same period, fuel prices have gone up multiple times. It is the same for us. Though the costs of a lot of our services internally have gone up in the last ten years, there is a need for cost efficiencies to be measured constantly. If there is scope for any improvements then they should be implemented. Businesses which are not flexible enough to the dynamism of cost demands would find it difficult to survive.
Last but not the least - what would your advice to Mutual Fund investors be, ahead of the 2019 general elections? Overweight equities or a more measured approach to risk-taking?
Investing through the asset allocation process is the best way to invest. One should invest with proper goals in their minds. Once one adds a purpose to investing then the rest becomes easy. The key to successful investing lies in the ability of the investor to stick to their goals through asset allocation. Changing allocations due to market prediction is a fundamental folly which leads to a financial plan failure. Elections happen every five years and they are just another event in the journey of the investment. One should not read too much into it and just continue investing in a disciplined manner.
If the markets become volatile, then it would work for the benefit of existing SIP investors as the true virtues of Rupee cost averaging would be experienced. They should continue irrespective of any market movements.
Investors need to understand that India is a growing economy and the same would reflect in the capital markets. To benefit from it, one has to stay invested.