Lakshmi Iyer
Chief Investment Officer of Debt and Head of Products, Kotak Mahindra Asset Management Company Limited
Lakshmi has been recognised by Asian Investor as one of the Top 25 most influential women in asset management in Asia, and has won multiple accolades on behalf of her firm for spearheading innovative ETF strategies across Asia. In this interview, she speaks to us about her emphasis on macro, the evolution of her role towards a greater emphasis on investor relations, and the critical importance of never turning your back on technology.
“India asset management is, in my view, a custodian of trust for investors, so we need to keep the faith.”
Lakshmi Iyer
Tell us about your role at Kotak Mahindra AM and what your key business priorities are
As Chief Investment Officer, my priority is to maximize performance within a given risk framework. As the sixth-largest mutual fund in India, we manage AUM* of Rs. 161,209 crore (approximately US$23.5bn). When investing via mutual funds, investor education is an imperative. Therefore a vital part of my role is interacting with stakeholders, including advisors and investors, both domestic and offshore.
Over the many years I’ve spent at Kotak Mahindra Asset Management, my role has evolved from research to a more outward-looking role, with a greater emphasis on external communications. Clearly, there is a need to differentiate between noise and news, which is why effective communication is so critical. The importance of risk management can never be understated, and it takes up a good amount of my time. India asset management is, in my view, a custodian of trust for investors so we need to keep the faith.
* QAAUM as of April – June 2019
What are some of the greatest challenges facing CIOs today?
One of the greatest challenges facing CIOs today is how to clearly harmonize risk and return. This is always on the minds of investment managers. A key consideration when making investment decisions is what the delta is in return for the extra risk. It often feels like you are on a tightrope and it is a tough balancing act for many CIOs today.
How do you form an investment view?
We place a strong emphasis on macro — that is critical in informing our investment view. We look at both domestic macro, including politics, and global macro, which covers the trade war and fallout for China, the U.S. and India. From an investment view standpoint, it’s not easy to look too far into the future, as markets are very dynamic in nature. With today’s volatile, interconnected market environment, agility needs to be built into one’s investment view in order to achieve long-term sustainable performance.
What role will technology play in the future of asset management?
Our chairman, Mr Uday Kotak, once said, “Technology is like God.” If you believe in god and there is god, you are fine. But if you don’t believe in god and there is one, you are in trouble! There is no doubt that technology is changing our lives. For asset management, state-of-the-art, cutting-edge technology is essential for firms to manage risk, analyze portfolio performance and develop innovative techniques in investment management. Technology, including algos, quant and business analytics, helps asset managers identify trends and stay ahead of the curve.
What investment principles do you live by?
There are a few. First, one cannot manage money with emotion. Second, investors need to be agile and swift. And finally, there is a thin line between conviction and foolhardiness.
What makes asset allocation unique in your region?
India’s asset management industry is a $300-billion industry, and is still growing at 15 to 20% on an annualized basis. As an industry, we have barely scratched the surface. We see strong investor interest across the globe, including in Japan, Canada, the U.S. and the Middle East, as their asset allocation diversifies. In the last five years, we’ve seen an increase in global investments channeled into India’s fixed income. More recently, we’ve also seen a decisive mandate on the political front, so that is just going to fuel India’s fast-growing economy and that cannot go unnoticed.
What role does Bloomberg play in driving your business growth and buy-side journey?
Bloomberg provides seamless transmission of real-time data and information for our traders and portfolio managers to make the right investment decisions. Having the right data has a significant impact on our investments. The ease of use of a Bloomberg Terminal, its ability to connect all our portfolio managers around the world and its advanced analytics make Bloomberg a preferred technology partner for us, as we continue our buy-side journey.
Additional Resource
Kotak Mahindra Asset Management and Bloomberg
Lakshmi is also one of the founding members of the India chapter of the Bloomberg Women’s Buy-Side Network — an informal community of current and future female leaders in Asia’s asset management industry.
The Journey to Tomorrow’s Buy-Side Operating Model
Today’s buy-side leaders know they need a clear, compelling vision to stay competitive. Attracting new assets, providing transparency and value, meeting growing regulatory demands, empowering people with efficient processes and tools, managing costs and maximizing performance are all essential.
Solutions for the Buy Side
Powered by an unparalleled combination of automation, innovation, access and service, Bloomberg’s comprehensive and integrated enterprise solutions help buy-side firms generate alpha, develop and service clients, remain compliant and grow profits in the face of change.