One must look at BFSI as a longer-term story and not just a cyclical play.Mirae Asset Investment Managers India has announced the launch of the ‘Mirae Asset Banking & Financial Services Fund’, an open-ended equity scheme investing in the Banking and Financial Services sector. The NFO for the fund will open for subscription on November 25, 2020, and will close on December 4, 2020. The fund will be managed by Harshad Borawake and Gaurav Kochar. The minimum initial investment in the scheme will be Rs 5,000 and multiples of Re 1 thereafter.
The fund may invest in the equities of banks listed in India, Public Sector Banks, Private Banks, Foreign Banks and Regional Rural Banks. The fund may also invest in Asset Management Companies (AMCs), Life and Non-life Insurance Companies, Broking Companies, Rating Agencies, Exchanges, Wealth Management Companies, Non-Banking Financial Company (NBFCs), Microfinance Companies and Fintechs.
The fund will aim to identify high growth companies which have high return ratios and possess sustainable competitive advantage. The aim is to build a portfolio of strong growth companies reflecting our most attractive investment ideas. The fund will have flexibility to invest across market capitalization. Financial companies account for approximately 30% of the market capitalisation of the top 250 companies.
Despite a high saving rate of 19% in India as against a 9% World average, India remains an underbanked economy with a strong potential for growth. The Indian financial sector has low penetration across categories AMC, Life Insurance, Capital Markets all highlighting the huge growth potential in these categories. Indian banks’ capital position has been strengthened over the last few years, with Tier 1 capital at 13% in FY20 against the regulatory mandated 9.25%
“The Banking and Financial Services sector is not only the largest but also the most diversified and largest sector in the Indian economy. Over last 2-3 decades, the sector has transformed itself from just banks to other allied businesses such as NBFCs, Insurance, AMCs and capital market players. The government expects the Indian economy to grow to USD 5 trillion in the coming years and the Banking Financial Services & Insurance (BFSI) sector being the backbone of the economy can be the key engine to drive this growth. One must look at BFSI as a longer-term story and not just a cyclical play. The theme of improved financial services penetration, credit availability and the long-term goal of the government to improve the economy go hand in hand with banks and financial services sector and thus it remains the key engine to drive of the economy. We believe that as economic sentiment improves post-Pandemic, the sector will play a crucial role in India’s economic revival, said Swarup Mohanty, CEO, Mirae Asset Investment Managers India Pvt. Ltd.
Neelesh Surana, CIO, Mirae Asset Investment Managers India Pvt. Ltd said, “We continue to remain positive on the banking and financial services sector which will undergo a material transformation in the period ahead. The transformation to organised economy, as well as the long-term shift to financial assets augurs well for growth. The sector offers structural growth opportunities with improving financialisaton, and increase in penetration levels in products like insurance, etc.”
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