There are strong reasons for optimism about the development of India’s funds industry, not least the advancement of third-party management for institutional investors, according to Ashu Suyash.
Only recently Suyash left the long-only funds industry to become chief executive of ratings and analytics firm Crisil on June 1, based in Mumbai.
Speaking to AsianInvestor at the start of her new role, she took time to reflect positively on her time in the funds industry, having served as country head for Fidelity Worldwide Investment’s India asset management business for nine years from 2003 before becoming CEO of L&T Investment Management after it acquired Fidelity’s Indian unit in late 2012.
“I have seen the whole industry cycle, from the bull run from 2005 to 2009, to the global financial crisis and the resurgence over the past two years,” she said from Mumbai’s Bandra Kurla Complex.
“That stretches from a time when only new fund launches could raise assets to today when performance and track record get money. While the industry comes in for a lot of criticism, I would say I leave it in a good place.”
Suyash herself has been outspoken about India’s funds industry, on one hand criticising distributor remuneration for mutual funds as unfavourable in 2010, while on the other hand talking up positive change by Indian securities regulator Sebi in 2012.
Taking stock today, she described modern Indian asset management as a young industry that only really started in the mid-1990s, stressing it was in a “classic evolutionary phase”. She argued that industry players needed to look at the market with a greater sense of perspective in terms of India’s broader development.
She expressed confidence that the nation’s low mutual fund penetration rate (less than 4%) would improve, saying the industry was on a more sustainable growth path than in the past.
She highlighted how India’s $91 billion Employees’ Provident Fund Organisation had recently been granted a mandate to invest in equities, initially in ETFs and subsequently expected to be in active funds outsourced to external fund houses.
“That’s probably the start of it [widespread institutional mandates],” Suyash said, referring to the likelihood that other pension schemes in the country would follow suit.
She described the level of industry progress since the turn of this century as commendable, arguing that India stacked up well against other countries.
Asked what was behind her optimistic industry view, she replied: “Fundamental reasons such as India’s favourable demographics and improving per-capita income. Then reflect that collective investment schemes remain one of the best savings vehicles around, you can’t take away from that. The rest [industry growth] is down to education, execution and evolution.”
Asked about her new role at Crisil, whose parent is Standard & Poor’s, a part of McGraw Hill Financial, Suyash noted that her new employer provided ratings, research and risk and policy advisory services. She added that as a ratings agency it covered the full spectrum from large corporates to mid-market players, small and medium-sized enterprises and banks.
Her new role covers all of Crisil's domestic and global businesses, including ratings, global research and analytics, India research and risk and infrastructure solutions. “It was an attractive opportunity and provided a larger platform to influence change and help further the development of capital markets in India,” she said.