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Cafemutual successfully organized the first CafeAlt Conference, an event that gathered stakeholders from the alternates industry to deliberate on the ways to grow the alternates pie. The event featured 15 sessions in which 30 speakers gave insights on the latest trends of AIF and PMS.
Here are the highlights of the sessions held during the event:
Economy and Markets Outlook
Speaker: Prashant Jain, Founder, 3P Investment Strategies
- India's growth looks promising due to favorable geopolitics and expansion of sectors like manufacturing, CAPEX
- Low inflation and cost of capital helped sectors like IT and exports
- Supply of stocks has coincided with the high demand due to which the estimate for growth in Indian equities is conservative
- Small caps, manufacturing and defense sectors have high valuations due to which the risk-reward is lower in them
Understanding the Potential of GIFT City
Speakers:
Dr. Dipesh Shah, ED, IFSCA
Pradeep Ramakrishnan, ED, IFSCA
Pavan Shah, General Manager, IFSCA
- A good regulatory approach by RBI, SEBI, PFRDA along with support from government contributed to initial growth of IFSCA
- 28-29 banks saw growth in their assets in the last few years from Rs.3 billion to Rs.62 billion
- 140 funds are part of the IFSCA ecosystem with 10-15 funds entering every month
- Understanding of GIFT increased among distributors
- IFSCA system has seen success in the bond market
- Distributors play an important part in fund management and need to be regulated
Alternative funds: look beyond listed equities
Speaker: Anunaya Kumar, President, Sales and Distribution, 360 ONE Asset
- Yield seeking investors, taxation law changes, decreasing NPA have been key drivers of private credit growth
- India's GDP growth, digital public infrastructure, political stability and China's decline have led to growth of private equity
- India has increased its share in the Asia Pacific market
- Alternate AUM is expected to grow 2X between 2021 and 2026
Success Stories in AIF and PMS
Speakers: Anand Shah and Saurabh Mittal
Moderated by: Nishant Patnaik, Associate Editor, Cafemutual
- Anand Shah checks the track record of AIFs like investment strategy, past performance, uniqueness and associates with AMCs to shortlist schemes
- AIFs have generated 4-5% alpha in the last 7-8 years
- Unlisted companies have fair valuation compared to equity markets, which gives higher growth potential
- Distributors should make clients understand risks in AIFs better and understand that AIF is where the MF industry was 10 years ago
- PMS has more innovative offerings for distributors and exposure beyond top companies
- PMS offers concentrated portfolio and non-pooled allocation
- PMS distributors should have conviction
- PMS has a little taxation disadvantage if the churning is high
- Saurabh looks for qualitative filters like whether the fund manager is invested in the scheme, team strength, ground research, approachability of the fund manager and exposure to innovative offerings to shortlist PMS schemes
Alternates - The Big Picture
Speaker: Vikaas M Sachdeva, MD, Sundaram Alternates
- Investors are becoming more aware and moving towards nuanced products and moving away from cash and pension funds
- HNIs are looking for more diverse and innovative investment solutions with PMS
- Indian AIF industry has grown 10X in the last decade
- AIFs offer diverse alternative products like venture capital, private equity, private credit, real estate and long only funds
- AIFs are also growing in non-metro locations and among individual investors.
Understanding the Taxation Maze
Speakers: Kunal Shah, Partner, PWC
Neha Bagri, Associate Partner, PWC
Global private equity funds want access to Indian HNIs
- GIFT City structure provides tax incentives for such Indian investors to invest in global offshore funds
- Cat II and III are becoming more popular than mutual funds
Emerging Sectors and Trends in Equity Investment
Speakers: Dhiraj Agarwal, MD, Ambit Investment Managers
Madangopal Ramu, Head - Equities and Fund Manager, Sundaram Alternates
Sandip Bansal, Senior Portfolio Manager, ASK Investment Managers
Moderated by: Munish Ramdev, Founder and CEO, Cervin Family Office
- Manufacturing, defense and energy Sectors have seen high investment in the last few years
- Corporate balance sheets are in a better situation now
- Mid and small caps have done better than NIFTY
- Promising narrative about Indian markets is helping valuations
- Inflows in equity markets don't look like slowing down in the near future
- Sectoral and thematic funds may not even deliver FD returns in the next few years
- There is a tendency to overestimate growth in a bullish market
Investment Strategies and Risk Management in Private Debt
Speakers:
Bhavdeep Bhatt, CEO, Northern Arc Investment ManagersKarthik B Athreya, Head - Fund Strategy (Private Credit), Sundaram Alternates
Lakshmi Iyer, CEO - Investments and Strategy, Kotak Alternate Asset Managers Limited
Moderated by: Maneesh Dangi, MD and CEO, Mosaic Asset Management
- It is a misbelief that only public debt funds give returns
- Private debt funds should ideally give higher returns than public debt funds to justify their risk levels
- Private debt funds can give higher returns than bonds even in the event of a loss
- Risk assessment is necessary for investors before investing
Opportunities in Real Estate
Speakers: Amit Bhagat, CEO and MD, Ask Property Fund
- Mumbai/Navi Mumbai/ Thane is the largest real estate market in India followed by Pune and Hyderabad
- Top 10 listed developers are increasing their market share
- India's mortgage to GDP is 11% , hence our economy is not driven by mortgage
Succeeding in the Indian markets
Speaker: Rashi Talwar Bhatia, CEO and CIO, Ashmore
- Volatility in the market creates investment opportunities
- It is necessary to understand the sector/company and plan remedial measures in the event of a loss and approximate timeline for measures to play out
- Primary return driver is alpha and is market cap agnostic, benchmark agnostic and needs a high conviction portfolio
Deciphering the diversity in PMS
Speakers: Raghav Iyengar, CEO, 360 ONE Asset
Sameer Shah, Co-founder, Value Quest Investment Advisors
Saurabh Mukherjea, Founder and CEO, Marsellus Investment Managers
Moderated by: Prem Khatri, Founder and CEO, Cafemutual
- PMS industry is evolving and overcoming its drawbacks like lack of data regarding performance
- PMS also discloses its entire portfolio to its investors every quarter
- PMS also has portfolios that blend mutual funds, bonds and gold offering unique exposure to its investors
Risks and Rewards in Performing Credit
Speaker: Prasanna M, Chief Sales Officer, Vivriti Asset Management
- There are large pools of undiscovered mid-market enterprises which points to huge potential in performing credit
Alpha generating strategies
Speaker: Sameer Narayan, Head - Alternate Investment Equity, ABSL AMC
- Focus on less beta and low churn stocks
- None of the schemes should have more than 20% portfolio overlap
- High returns can be obtained even with lower risk investment
Building Wealth with Real Assets for a Resilient Portfolio
Speakers:
Abishek Goel, MD and Head - Infrastructure and Real Estate Funds, Neo Asset Management
Gaurav Puri, CIO, NCW Asset Management
Yash Ravel, CEO, Fund Management, Welspun One
Moderated by: Umang Papneja, CEO, Julius Baer
- Demand for high quality warehousing and real estate is high
- Warehousing is a sector that generates high risk-adjuated returns
- REITs cannot give high returns compared to an AIF
- AIF has higher returns but has less liquidity than InvIT