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||Mr. Krishna Sanghvi, Head of Equities at Kotak Mutual Fund manages several mutual funds like Kotak Opportunities, Kotak Tax Saver, Kotak Balance etc. He shares his extensive experience in the Indian Asset Management Industry and explains how students can make a career in this industry.|
Mr. Krishna Sanghvi, Head of Equities at Kotak Mutual Fund has over 15 years of experience in the Indian capital markets. He joined Kotak Mahindra Group in 1997 and has worked with Kotak Mahindra Primus Ltd., Kotak Mahindra Finance Ltd. and Kotak Mahindra Old Mutual Life Insurance Ltd before joining Kotak Mahindra Asset Management Company. Mr. Sanghvi has significant experience in Credit Appraisal & Credit Risk Management, Dealer Finance, Business Planning and Fund Management. He has been associated with the Asset Management Company since February 2006 where he has been in the Equity Fund Management team managing equity portfolio. The schemes managed by him are Kotak 50, Kotak Opportunities, Kotak Lifestyle, Kotak Tax Saver, Kotak Balance, Kotak Income Plus, Kotak Contra and Kotak Select Focus. Mr. Sanghavi's educational background comprises Bachelor of Commerce, Cost & Works Account from ICWAI, Master of Management Studies (Finance), Mumbai and Chartered Financial Analyst from ICFAI.
Thank you Mr. Sanghvi for speaking to DaulatGuru.com. We are glad that you have taken out time from your busy schedule to speak to us.
What are your expectations from the Indian stock market in 2011 compared to the previous year? Do you think equities will outperform or under perform other key assets classes this year?
The expectations are quite clear; India is on a secular growth track in terms of economy, rising per capita income, positive demography and employment creation. The growth in these variable usually translate into a healthy growth in equities market as the growth is appreciated and rewarded by investors and we believe that the similar trend will be maintained this year also. We had a reasonably good last year and the expectations for 2011 are slightly moderate on account of macro headwinds like oil prices, inflation and interest rates. In terms of absolute numbers however the expectation is positive and outlook for the stock market is good in 2011.
Yes, in comparison to other asset classes, I think equities would outperform this year.
Indian market has witnessed huge foreign fund inflows in the previous year. Going ahead what is the trend you expect in these inflows and how would it impact our equity markets?
Yes, in terms of inflows too there would be some sort of moderation this year. Last year we had inflows of around $30 billion. We are not expecting a similar inflow this year but at the same time, we believe there would be positive inflows for the year due to strong fundamentals of Indian growth story.
The Sensex has declined from 20,500 in December 2010 to 17,500 points in February 2011. Is the market correction over?
Yes, I think market has corrected sharply in a very short time. We would not be much worried about further correction as valuations are again reasonable vis-a-vis the growth.
Do you think the political instability and governance issues affect the markets?
It is difficult to gauge the impact of the political scenario and scams on the markets. We should also consider the positives that have emerged in terms of the actions taken against people suspected. We would rather say that corporate governance would have a bigger role in impacting markets.
Which are the key factors in your opinion that are likely to decide the trend of markets this year?
Essentially there are three factors that would influence and decide the trend of the markets. These are:
1. How Indiaâ€™s current account deficit and fiscal deficit shape up?
2. Impact of rising commodity prices (especially crude prices) and interest rates on Indian economy
3. How the global economy grows with USA, Europe and China being key players?
Is the rise in global commodity prices a short term aspect?
It is not easy to predict short term movements in commodities but in a way, rising commodity prices are a reflection of longer term trend where a vast population from China, India and Africa starts consuming and give an upward push to demand and prices.
How does the Euro zone crisis affect the markets in India?
The direct effect of euro zone crisis on Indian economy is quite less but it does affect the financial market sentiments. On the whole we donâ€™t think itâ€™ll have a significant impact on Indian markets over medium term.
Which sectors are you bullish on or which sectors would you avoid in 2011? Are there any particular themes that look appealing to you this year?
We are positive on financial services, positive on Information Technology (IT) space and positive on Pharma Sector. I would say Real Estate is something which one can still avoid.
What are the near term Kotak AMC's Growth Strategies?
We are always looking to grow by reviewing our product mix and the changing business dynamics.
Do you think the issue of entry load in mutual fund industry would be taken up by Mr. U K Sinha?
It is difficult to anticipate regulatory actions.
What steps do you suggest that a retail investor should take in order to select an appropriate mutual fund for his/her portfolio?
Frankly, a retail investor should ensure that he has a basic asset allocation strategy in place and has exposure to equity. A retail investor can choose a mutual fund rather than investing directly in stocks. This is because they either lack the knowledge and expertise or do not have adequate time to do the required research. Based on the track record of the mutual fund scheme, fund manager and risk appetite of the investor, a retail investor could judge the right fit.
How can a finance student make a career in the field of Asset Management?
I think essentially to make a career in the Asset Management Industry, one can look forward for the following profiles:
- Equity Analyst
- Debt Analysts
- Fund Managers
If someone seriously is looking at pursuing career in Mutual Fund Sales, then one has to understand the asset allocation rules, asset allocation strategies, economic & company research and valuation techniques
What form of Certifications would add benefit to a Student to make a career in Asset Management?
For a Fund Manager, I think Chartered Financial Analyst (CFA) would probably help for a career and if one looks at the Sales as a career, Certified Financial Planner (CFP) would also benefit.
What is the most important learning from the global financial crisis in 2008?
The major cause has been excessive leverage in the financial systems across the globe, especially the developed world. This led to a dip in economic growth in the world and so we should be cautious about running excessive leverages. A lower leveraged entity can withstand a crisis far better than a highly leveraged entity.