Mirae Asset MF plans to allocate more for debt

Shobha Roy Kolkata | Updated on July 10, 2019 Published on July 10, 2019

Swarup Mohanty, CEO, Mirae Asset Global Investments (India)

Mulls changing equity-to-debt ratio to 60:40 from 80:20

Mirae Asset Mutual Fund, which currently has more than 80 per cent of its assets under management (AUM) coming from equity schemes, is looking to scale up the share of debt to achieve a more balanced portfolio.

According to Swarup Mohanty, Chief Executive Officer, Mirae Asset AMC, the company would aim to shore up the share of debt to its total AUM to close to 40 per cent from the current 20 per cent in the next two-to-three years.

Not the right balance

“The share of equity-to-debt in our AUM is currently 80:20 but it is not exactly a right balance. We would like to be in the 60:40 regime. On the debt side, we have been more of a good portfolio organisation than being return chasers. In the next two-to-three years, we will see good value for that positioning,” Mohanty told BusinessLine.

While a good portfolio’s returns may not be so good, the downside is protected. And Mirae would prefer being in that segment. It might take some time for people to understand and recognise this, however, in the next three-to-four years the transformation of assets would start happening, Mohanty said.

The AMC has seven equity funds and four schemes on the debt side at present. It has also filed for an overnight fund. It has also put in place a debt team to enhance its focus on the segment.

Mirae Asset also expects demand for ETFs to grow and is looking to build the business in the next two-to-three years in a more structural manner. ETF is currently a very small business at around ₹20 crore. However, it has the potential to grow. “Right now, we are just understanding that business. But in just a matter of months we will bring more products under that category. We are in talks with most of the benchmark providers. We have formed our ETF team last month. We might get two-to-three products on the ETF side,” he said.

The AMC expects its AUM to grow to ₹40,000 crore by end of December this year, compared to ₹28,000 crore last year. The company follows a January to December year.

Stay invested

According to Mohanty, it is a good time for investors to allocate and stay invested. The economy is currently at a “unique situation” and the large companies are poised to become larger, hence, making for a good buy; while the mid-caps are at 20 per cent discount to large-caps, and hence, it is a good time to start accumulating them.

“It is a very unique position for investors. Over the next four-to-five years as the economy progresses towards $4-5 trillion, all these companies will get benefited in that growth. My earnest request to investors would be to allocate and stay invested. Retail investors should not only continue their SIPs but should top it up,” he said.

Published on July 10, 2019
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