In an annual review on fund families, we spoke to mutual fund honchos to get their views on some of the pressing issues facing the industry. This is what Jisang Yoo, the CEO of Mirae Asset Management Company had to say:
What factors would increase the appetite for investing in mutual funds beyond the top 15 cities?
In order to reach beyond the top 15 cities the industry needs to focus a lot on creating awareness and financial literacy among investors. We also need to empower IFA's with professional training and education to educate investors. We need to use banking channels in those cities to increase penetration. This can be done through regular knowledge seminars, summits etc. Mutual fund penetration in India is only 3 per cent compared to 40-70 per cent for many advanced and emerging markets. We believe the numbers should significantly grow in the years to come. I believe mutual funds are the best among other financial vehicles in India to meet investors' requirements over the long term.
Have the direct plans seen greater retail participation?
A survey conducted by Crisil states that the quantum shift to direct plans is much higher in the debt fund category vis-à-vis equity. Investments in direct plans of liquid funds touched 1 lakh crore in June quarter from Rs 24,000 crore in March quarter. But this participation is more from the institutional investors and high networth individuals as these investors are capable of taking informed individual decisions. But these plans have not yet seen major traction from retail investors. Retail investors should carefully consider whether they need advices from professionals or not. I feel a vast majority of retail investors need professional advice on asset allocation and financial planning so they can make informed decisions.
What investor education initiatives has your AMC taken?
One of the core values for Mirae Asset Financial Group is “Client First”. Our client's success is our success. We believe in nurturing a long term relationship by helping our clients build wealth for life with proven investment strategies. We have set up a dedicated Mirae Asset Knowledge Academy through which we impart investment education to investors using scientific platforms, methods and process. We conduct regular investment education camps across cities. We also release plethora of newsletters and educative communiques for investors. We extensively exploit the bulk emailing medium to reach out to investors.
For example, we release Investor Speak -- a bi-monthly newsletter exclusively for our investors. Also, there is ' Term of the week' -- where we demystify complex financial terminologies and concepts in an easy to understand manner. Then there is Mirae Asset Day which we observe on 30th of every month and on that date we do investor Camps and release investment newsletters. Given our positioning of Emerging Market Experts, we share informative communiqués like emerging market insight and emerging market outlook providing extensive information on emerging markets is shared with stakeholders.
What's the road ahead for your AMC?
Mirae Asset is present in India since the past six years and has crossed the first stage of the business plan which includes launching and running successful funds and introducing its capabilities to Indian investors. We are foraying into the second stage which involves increasing the AUM, developing sustainable relationships and building a solid presence in the Indian mutual fund market. We are aiming to double our AUM every couple of years.
The current fiscal is very exciting year for Mirae Asset as our funds have completed important milestones this year. We hope to get more distributor tie ups and raise the AUMs of our funds significantly. Our domestic equity funds, Mirae Asset India Opportunities and Mirae Asset Emerging Bluechip Fund, are performing well and will form the base for our business plans in India.
We will enhance our product basket across diversified assets so that our clients can easily choose products based on their risk profile and investment tenure. We have won several institutional mandates this year and provide advisory business to our Hong Kong and Korea offices. Advisory business will be another axis of our strategy in India. On the business front, we are keen to pursue opportunities through the QFI route because we have a good distribution networks in our Asia Pacific market. QFI will be one of our major focus areas for the next three years.
Brief us about your personal investment philosophy?
I believe diversification is the optimal solution for long term asset management since we can reduce investment risks without sacrificing return, especially if correlations of between investment products are low. For example, if investors had diversified their exposure to developed market (US, Japan), they could have benefited from equity price appreciation as well as benefited from depreciation of rupee. Sometimes short term trading tactics work; however, history has shown that chances of success from market timing strategy haven't been too high, leaving higher risks to investors. Hence I prefer to focus on long term asset allocation with a well-diversified portfolio. Indian investors also have good options for their asset allocation; real estates, fixed deposits, gold, domestic equities, international equities, fixed income, etc.
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