Sid Swaminathan, Jio BlackRock CEO, expects India’s MF industry to witness massive rise
The country’s equity markets have more than doubled over the last five years and drawn millions of retail investors
Sid Swaminathan, Chief Executive Officer of Jio BlackRock Asset Management, an alliance partner of Mukesh Ambani’s Jio Financial Services Ltd., and the world’s largest asset manager, is beginning to increase its participation in Indian financial markets, especially on digital platforms.
While Asia’s richest man, Ambani, has sought to reshape the industry by leveraging his vast telecom and retail empire, for BlackRock, the tie-up marks a return to money management in the world’s fastest-growing major economy after its exit in 2018.
The move coincides with a shift in household savings (previously opting for gold or buying a property) towards financial markets. It has fueled an explosive growth in the domestic mutual fund (MF) sector, with assets more than doubling over the past five years.
Swaminathan, who joined the venture after a 20-year stint with BlackRock in London, remarked, “Being in India at this point in its economic journey, there are so many tailwinds in our favor.”
Meanwhile, India’s equity markets have more than doubled to $5.3 trillion over the last five years, drawing millions of retail investors.
However, Jio BlackRock faces stiff competition from entrenched fund houses backed by major lenders such as HDFC Bank Ltd, ICICI Bank Ltd and the State Bank of India, which command big distribution networks that reach small towns and villages. At the same time, online investment platforms such as Groww and Zerodha are also fueling the boom in direct MF sales.
In July, the Jio BlackRock venture raised over $2 billion in three days for its debut funds, placing the alliance among the top 15 in the category.
Swaminathan added, “For us to be operating in the next five years as a player of scale, it has to be about growing the market, rather than just capturing market share from existing players.”
Undoubtedly, he hopes to shape the asset manager’s approach. It is preparing a mix of passive and active strategies, with its first active equity fund to be launched soon. The product will draw on nearly 400 indicators on about 1,000 Indian stocks, building a portfolio broader than is typical for the segment.
Jio BlackRock also plans to launch a fund that rotates between sectors based on quantitative signals and is considering another one that systematically allocates between asset classes.
The partnership hired Rishi Kohli, who headed hedge fund quantitative strategies at InCred Capital and Avendus, as its chief investment officer.
Swaminathan stated that in India, the scope for growth in systematic strategies was large, given the low starting point. Evaluating the data-driven approach that also incorporates human judgment, he added that as the market matures with more stocks and greater industry diversity, it becomes more conducive to such strategies.
The Jio BlackRock partnership, spanning asset management, wealth management and equity broking, is pursuing a direct-to-consumer strategy via its app, bypassing traditional brokers and distributors. It plans to use alternative data, from web-search activity to retail sentiment on online forums and evaluate auditor quality when ranking firms.
However, a sharp market decline could slow the sector’s expansion. Indian equities have underperformed emerging-market peers in the past year, due to weak earnings growth and stretched valuations. Yet, even as foreign funds retreated, retail flows remain resilient, with monthly systematic investment plans topping $3 billion in August.