Optimix targets Rs 5000 cr AUM

Optimix, the multi-manager investment division of ING Investment Management, has set an ambitious target of Rs 5,000 crore for assets under management (AUM) over the next one and half years by attracting long-term retail investors to its range of fund-of-fund products.

The company, which launched its first scheme just over a year ago, is planning to have a complete suite of fund-of-fund products in India as it seeks to popularise the multi-manager and fund-of-fund schemes in the domestic market.

The fund-of-fund schemes, which manage portfolio assets containing a suite of funds belonging to various mutual fund houses, is yet to capture the imagination of the investing public in India though it is the fastest growing mutual fund product globally.

"We know that our struggle will be hard. Getting the long-term retail investors to multi-manager products is not going to be easy," admits Ashvin Arora, the 50-year-old managing director of Optimix in an interview.

Out of the total Rs 3,50,467 crore assets managed by mutual funds, only Rs 2,203 crore are fund-of-fund schemes, according to trade body Association of Mutual Funds in India (AMFI).

Optimix, through its eight schemes, manages assets worth about Rs 1,500 crore.

Globally, multi-manager mutual funds have more than $964 billion in AUM. The multi-manager funds are growing at a compounded annual rate of 18 per cent, as against the mutual fund industry's CAGR of 5 per cent.

The challenge for Optimix is to increase its assets base without raising money through liquid funds. Some new mutual fund houses in India are ramping up their asset base by launching liquid funds, which easily attract surplus short-term cash from companies.. "We have zero amount in liquid schemes," Arora said.

The launch of new products would be an important strategy for Optimix to boost the assets to the targetted Rs 5,000 crore. "Ongoing sales are important. We can also go for differentiated products till we have a complete range of products. We still don't have a mid-cap or a small-cap fund," he says.

Optimix has also filed its documents with the Securities and Exchange Board of India (Sebi) to launch a fund-of-fund scheme for Gold Exchange Traded Fund (Gold ETF).

The investors are required to have demat accounts to invest in the Gold ETF scheme. Considering that 80 per cent of mutual fund investors do not have a demat account, Optimix's Gold scheme hopes to attract these large pool of untapped investors.

Arora counters the criticism that fund-of-fund schemes are lazy investing. The company's debt scheme, like all its other schemes, is an actively managed scheme, he explains.

While fixed maturity plans are popular now, G-secs and later liquid schemes provided higher returns. "The yield curve in debt has shifted enormously in recent times. We play the yield curve and it requires huge amount of expertise," he says.

Similarly, in equity funds, Optimix employs "multistyling", using the underlying styles of different fund managers to buy stocks, Arora pointed out.