Interview/ Sid Swaminathan, MD and CEO, Jio BlackRock Mutual Fund
Q\ India has some 50 mutual funds now. What is BlackRock bringing to the table?
A\ Our value proposition is how we differentiate ourselves. How we provide something that is unique at the right price point. As an asset manager, we want to cater to the entire spectrum of investors. That is why we started with cash funds, which predominantly cater to corporate treasuries and the institutional sector.
Then we started with core building blocks—the five index funds that we launched. These are the kind of exposures that make a lot of sense for an individual to start building the portfolio of investments. We would like to take them to a more advanced state of that journey, rather than a single stock or a single trade.
We are bringing global best practices to India. Most active funds now are human-driven. It’s a fundamental look at analysing securities; it’s a fund manager plus a team of analysts that take the call. [Our] strategy turns it around on its head. It uses a lot of data, and over the years we have developed robust data sets on many stocks. In India alone, there are more than 400 data points on around 1,000 stocks. Then we have a lot of technology. Aladdin gives us the ability to process all of this data into insights that can then be used by our fund managers.
The differentiating factor here is how the combination of data, technology and the human being is working in a unique ecosystem, and that’s what the systematic process is about, and that’s what we are bringing to India.
Q\ In India, the top eight or ten fund houses have the lion’s share of the assets under management. Do you think your processes and products will help you beat them?
A\ We believe that this market has tremendous room to grow. I see this industry getting to two to three times in the next five to seven years. It is not necessarily about capturing the market share of the existing Rs75 plus trillion; it is about how we get that to Rs150-200 trillion, and how much of that do we want to get over the next year.
We believe there is space for everyone, and we want to help grow the market, and then participate in the growth. That’s how we view competition.
Q\ Despite the equity industry growth, India remains a savers’ market. How will you convert these savers into investors?
A\ Education and trust are super important. The industry is already doing a fantastic job of education. The ‘Mutual funds sahi hain’ campaign is fantastic. We obviously want to contribute and increase to those efforts along with the industry, and hopefully bring our own lens to it. Our messaging could be slightly different. Given that we are BlackRock, global perspectives can be brought in.
As people get more aware of the benefits of investing versus just saving, you can start seeing these transitions. Our initial launch, which was in cash funds, primarily used by institutions, had 67,000 retail participants. It is a sign that this education is working, the trust is building. But we need to do more.