Kotak Mutual Fund (KMF), which has seen its average AUM more than double in the last two years, is open to inorganic growth, a top official has said.

“No opportunity will be left unexplored by us. If something is available to us and fits our DNA, we are always open,” Lakshmi Iyer, CIO — Debt & Head Products, Kotak Mahindra Asset Management Company, told BusinessLine here.

She was responding to a query on whether the fund house will take the inorganic route to scale up and build muscle. Currently, KMF is ranked seventh in the mutual fund industry in terms of assets under management (AUM).

Iyer maintained that there was currently no inorganic proposal on the table and that “there is enough for us in the organic space”. At the same time, she also said that KMF is not going to chase AUMs and this had not been its strategy till date.

Between March 2017 and March 2018, the average AUM of KMF had more than doubled to touch ₹1.24 lakh crore. Much of this growth could be attributed to the equities pie, which far outpaced the contribution of debt funds in the last few years. Of the AUM level of ₹1.24 lakh crore as of end-March 2018, about ₹45,000 crore was accounted for by equity funds and the rest debt funds.

Going forward, the focus of this fund house will be to grow both the equities as well as he debt sides, she said, adding that both are important for the overall growth.

“Our aim is to be a one-stop-shop (in financial services) for all your allocation needs. We are not looking to be a kirana store, but want to be a departmental store,” she said. The focus of the fund house is to have active managed strategies both in fixed income and equities, and this would be the approach going forward too, Iyer said.

AIF strategy

KMF has filed for an Alternative Investment Fund (AIF) product focussed on equities with the market regulator SEBI. “There is more appetite for equity AIF. We will start with that. It will be in the public space, and not in the private equity space,” she said.

Kotak’s AIF, once approved by the regulator, will be for a financially mature investor and involve ahuge ticket size.

Equity outlook

“It cannot be for the masses, but for HNIs, ultra HNIs who understand the risks associated with an AIF,” she said.

Iyer said that KMF, which has a little under 10 per cent market share in SIPs, will strive to engage proactively with channel partners — banks, IFAs — to improve visibility of its products.

“Our objective will be to chase mind share and not market share. We have a long way to cover. In debt, we are focussed on growing retail money. The increased financialisation of savings post demonetisation will help us here,” she said.

On equity market outlook, she said that India Inc’s earnings report card has been a “mixed bag” and that investors should not expect super-normal returns this year like those seen in 2017.

Debt side

On interest rate outlook, she pointed out that the markets have already factored in two rate hikes by the central bank in the remaining months this year.

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