Home / Money / Calculators /  If we are making profits, why should we consider leaving?

For Mirae Asset Global Investments (India) Ltd, 2008 was a terrible year. On the back of a global credit crisis that hit India too, its liquid funds, like most others, suffered a loss but its Korean sponsors did not take it on their books. This eroded confidence among Indian investors and money went out. But the fund house hung in there, fighting exit rumours every day, and survived. In a chat with Mint Money, its chief executive Jisang Yoo, explains that while equities have been successful, the fund house now has plans to get its debt fund management out of the cold storage.

There are reports that Mirae India might sell out and leave India.

I have been asked this a hundred times, but over the past year it has gone down (smiling). People mostly assume this because they think we are too small. But apart from the domestic assets, we have a very good advisory business. We provide advice for funds of about 5,000 crore of our Hong Kong office’s investments in India and about 10,000 crore that belongs to our Korean centres. That apart, we have started to make profits (since 2012-13). Overall expenses have gone down and we reduced unnecessary spending. Now, if we are making profits, why should we consider leaving?

Globally, Mirae Asset sees itself as an emerging market expert. We invest heavily in emerging markets because we believe we know these markets better than many. But without India, how can we be emerging market expert? That’s why India is actually one of our key markets.

Your equity funds have been doing reasonably well, especially Mirae Asset Opportunities Fund. What is the response from distributors and investors?

Actually, now I don’t need to explain my fund to the distributors. They already know. So we have now reached that point. More and more investors have come in our fund. We have about 16,000 investors who invest in us through systematic investment plans (SIP).

In the last one year, which has been quite challenging, we have witnessed a modest 3% growth in SIP count from March 2012-March 2013, but the average ticket size increased 13% during the same period.

This shows investors are increasing allocation to the fund. The total SIPs now contribute close to 30% of our folio count compared with 15% three years back highlighting investor confidence in our fund house.

Your debt funds pie is still very small and negligible since the crisis of 2008. Most of the other fund houses’ debt funds, except Mirae’s, have recovered. What are you doing to instil confidence?

Our Indian fund house has completed five years. We have been focusing largely on our equity business till now, building a good track record, meeting as many distributors as possible in the process. Now that we have completed five years, our equity AUM (assets under management) has grown and business has stabilized, I think it’s time to turn our attention to our fixed-income business as well. Our debt funds, especially in the past year, have given better performance than category averages. Our objective for the next year is to scale up our fixed-income business.

How do you plan to grow your fixed-income business?

Building a sustainable track record is a must for us. We want our debt products to have less volatility and more consistency in returns. We have so far focused on retail investors as far as debt funds were concerned; we haven’t quite touched the institutional segment in the past few years. But over the next six months to a year, we want to tap the institutional space too for our debt funds.

Also, we aim to get more international money into our debt funds. In east Asian countries such as Korea, Japan and Hong Kong, returns from fixed-income instruments are as low as 3% and then perhaps about 2% after tax. The biggest issue in Korea, these days, is longevity. People’s life expectancy is going up to about 90 years, but with their retirement age fixed at about 60 years, that means they got to live for 30 years on only retirement income. So they are very much looking for some other opportunities to invest. They have a big interest in Indian fixed-income market. We are now planning to bring Korean investors’ money to Indian fixed-income market. In April 2013, initially we got about 100 crore. Ever since then, we have been getting this money on a monthly basis.

That’s nice, but I would still like to think of such flows as a bonus. It’s not the key business; our key business will continue to remain our domestic money management.

Why is Mirae India Asset Management Co. Ltd led by a Korean? Couldn’t they find an Indian talent?

The decision was made by my seniors in Korea, so I wouldn’t be privy to the nitty-gritties. Localization is also very important for us. That is why our first chief was from India. I was already chief financial officer (CFO) at that time and before that I headed the products and marketing function here in India. I have been here now for four years. When our previous chief left in early 2013, I was appointed as the head. I guess, having been a CFO already and, therefore, having known the company, my heading the company just fits in.

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