The Indian MF Industry has lots of catch up to do with respect to size and types of products offered

BFSI Industry Interview
On: Jun 23, 2014 | From: Advisorkhoj Team
BFSI Industry Interview in Advisorkhoj - The Indian MF Industry has lots of catch up to do with respect to size and types of products offered

Mr. Jisang Yoo is the Chief Executive Officer of Mirae Asset Global Investments (India) Private Limited. In his capacity, he is responsible for the India AMC wherein he will work closely with the board, management team and employees towards further growing Mirae Asset India business.

Prior to this role, he has been associated with Mirae Asset Global Investments (I) Pvt. as the Chief Financial Officer and has also headed the Business development function of the AMC. Mr. Yoo has been associated with Mirae Asset Financial Group since 2007 wherein he has handled varied responsibilities and has held strategic positions in marketing, Human resource and Business development functions in Mirae Asset Global Investments (Brazil) Limited & Mirae Asset Global Investments Limited (Seoul).

Mr. Jisang Yoo has completed his Master’s in Business Administration from University of Rochester, New York and holds Bachelor’s degree in Economics. He has over 14 years of valuable experience in the field of financial services including four years plus experience in Asset Management Business. He has also been associated with organizations like NH Investment & Securities Co., Ltd as an equity analyst.

In an interview with Advisorkhoj, he shared his views on Indian Mutual Fund industry and how well placed MIRAE ASSET is to leverage the potential of under penetrated markets for Mutual Funds in India

Since the financial services industry in India and abroad are bullish on growth of the markets after Narendra Modi has got overwhelming majority. Let us start by asking your opinion on the growth of the Indian Mutual Fund Industry as the new Government has now come into power?

Considering the size of India economy, Indian Mutual fund market is still very small. Even if you compare the size of the Mutual Fund Industry with other emerging markets, the Indian MF Industry has lots of catch up to do with respect to size and types of products offered. If the new government reforms the economy successfully and inflation eases as they have promised, then demand for financial products like MFs will increase dramatically and it will have huge positive impact on the MF Industry. Let me also have big hopes, as all Indian people have currently.

You have been associated with Brazil and Seoul Markets prior to India. What is the difference in the investment pattern in these three markets and what are the good things that we can learn from the Brazil and Seoul Markets?

Firstly, Korea is becoming an aged country, where life expectancy has also increased substantially. Currently the interest rates are quite low. So retirement income planning and products are the key issues in the financial market. People need decent returns over long periods of time, so overseas investments is popular among Korean investors even though currency risk exists.

Brazil market has more than 1 trillion $ of Mutual Fund AUM. Brazil has high interest rates and this helps attract huge fixed income flows including foreign flows. Institution and HNI participation is huge in Brazil, which is missing in the India market.

Our MF Industry needs long term retirement products and participation from Institutions and Corporates. Also investors should look to diversify their asset allocation across asset classes, which means exposure to international funds should increase.

Penetration of Mutual funds beyond few top cities in India has not been significant despite Industry being there for last 20 years! What is your take on this? Can you share some global experience as to what other countries are doing for expanding market?

We think the penetration of Mutual Fund products is very low even in the top cities, hence beyond the top cities is a bigger challenge. However the industry is maturing and initiatives like Investor Education will definitely have a long term benefit. If we include financial education in school/college curriculum it will help the financial industry as a whole immensely.

The Industry needs to have more technological support, so investors can transact with ease through the net, mobile, etc. this has slowly started to happen. Adequate remuneration for all market participants will help the industry grow faster.

How you are promoting ‘Investment Awareness Programs’ in India?

We have established an academy – Mirae Asset Knowledge Academy – whose sole purpose is to increase investor and partner education and knowledge levels. We are arranging Investor Awareness Programs through our partners in all our cities or presence, to increase knowledge levels of investors.

We have released investor booklets, contribute articles in financial websites and national publications to explain financial terms in a simple languages. We share newsletters and mailers to our investors on key financial terms, every week. These are some of the activities carried out by us.

Have you adopted some districts? if yes, then which are the ones and how you are focusing to penetrate these districts?

We adopted a couple of B-15 cities and will try to increase investor awareness in these districts. We have devised a strategy for these districts, which I will reveal later on. Based on our learnings we can replicate this model in other districts in future.

The Mirae Asset India Opportunities Fund completes six years. Can you throw some light on its performance compared to the other equity funds? And, also the road ahead for India Opportunities Fund?

Mirae Asset India Opportunities Fund (MAIOF) has completed 6 years in April 2014. We are proud of the consistent track record that the fund has delivered to our investors. Since the fund’s inception the fund has delivered an absolute return of 145.82% compared to 55.44% of its benchmark S&P BSE 200 and 57.84% of S&P BSE Sensex. (as on 31st May, 2014)

The fund has also delivered SIP Returns of 18.98% during the same period compared to of 10.28% to its benchmark S&P BSE 200 and 10.86% of S&P BSE Sensex.

Both our flagship funds, Mirae India Opportunities and Mirae Asset Emerging Bluechip Fund have received various recognitions from leading publications. MAIOF is a large cap focused equity diversified fund which is flexible in terms of investing across Investment styles, themes, sectors & market-caps. The fund has already crossed 500 crores of AUM. We will attempt to continue this consistent track record and help build wealth for our investors.

You have some unique funds like, China Advantage Fund and Mirae Assets Global Commodity Stock Fund. Can you highlight some of the unique features of these funds and how it can benefit Indian investors?

Mirae Asset has launched unique and one of its kind offerings in India. The concept of launching these unique funds is to provide an alternate investment options for investors and help provide a larger product basket for asset allocation. Indian equity market is less than 2% of global equity market share. Investors shouldn’t lose out on the remaining 98% market opportunity. History says diversification always won the game.

Mirae Asset Global Commodity Stock Fund - The Fund offers investors access to commodity as an asset class by way of investments into commodity stocks of leading global companies involved directly or indirectly with the commodities business. The fund primarily invests in stocks in Asia Pacific markets and emerging markets.

Mirae Asset China Advantage Fund - (India\'s first pure China Fund source : - The Fund invests in an underlying fund, which invests in equities of sector leading companies domiciled in, or exercising a large portion, of their economic activity in China and Hong Kong. The fund gives investors an opportunity to invest in China companies with high investment potential.

Mirae Asset India China Consumption Fund- The fund gives investors a chance to invest in two of the world’s fastest growing countries in one go, with India portion being more than 65% of the total portfolio. The fund invests in sectors which may benefit directly or indirectly from consumption led demand in India and China.

Are you planning to add any more Equity funds (Through NFO) in your stable since the market is now upbeat and next 5 years atleast looks good!

We plan to launch a global fund leveraging on our international product basket which will provide Indian investors and exciting investment option.

A key goal for us is to build on the performance and AUM of our flagship funds Mirae India Opportunities and Mirae Asset Emerging Bluechip Fund.

Are you changing your investment strategy in alignment of the sectors that have suddenly started doing well or/ and may do well (example – Infrastructure, financial services) post expected reforms to be initiated by Modi Government.

We want to be long term investors and deliver superior risk adjusted returns. We keep reviewing our portfolio on an ongoing basis and we have aligned our portfolios to stocks/sectors, which may benefit from change in economic environment.

What would be the strategy of Mirae Asset in terms of increasing its retail participation and brand building?

At this stage, we are trying to increase retail participation by building relationship with our industry partners. Due to strong performance of our funds as well as unique product offering, most of the market participants are well aware of Mirae Asset Mutual Fund. We also keep getting coverage’s across national and regional publications and financial websites, which has helped number of investors, notice the performance of our schemes (our direct investor AUM has grown substantially in the last 1 year).

We will keep arranging Investor Education initiatives to increase the knowledge levels of our investors and be recognized as an AMC with a difference. We hope to spend more on marketing and branding activities to further enhance our brand presence.

Currently how many IFAs are empanelled with you? How do you plan to grow your distribution base? Which are the major locations you are looking at?

We currently have 6000+ IFA’s empanelled. We want to work the number to cross 10,000 across locations by the next financial year, and with strong performance of our funds and increasing investor acceptability, I think it will not be a tough ask for us.

What would be Mirae Asset roadmap for India for next 5 Years?

We want to become one of the major players in the Indian Mutual Fund Industry with a complete product basket across asset classes. We want to deliver superior risk adjusted returns to our investors.

Anything else you would like to add?

We are proud that recently Mirae Asset Mutual Fund won the Best Fund House Award from Business Today (Business Today, 8th June 2014 edition). Mirae Asset is the sole AMC which is the winner of this award. The award is based on Business Today - Value Research Study of Mutual Funds.