Asian and emerging market funds continue to pose strong buy-ins, regardless of volatility levels, according to Sivadeet Baruah from Oman Insurance Company.
While the head of individual life insurance believes equity remains the preferred asset class, there has been an increasing demand for alternate or bespoke strategies from clients, he said.
Baruah is expecting ESG demand to grow steadily in the next few years as clients start to look for more sustainable income.
Q: Tell us about your team and your role.
A: I head the individual life department where we offer savings, retirement and protection solutions to our clients. My team’s role is to manage the profit and loss of the line, design products based on our strategy, build and manage business process, select active and passive investment strategies of the 3rd party funds we offer under our unit link proposition, etc.
Q: How did you get started in the industry?
A: I started my career in 2005 with an Indian firm called NJ India Invest. I worked for NJ at their offices in Bangalore, Surat and Delhi before the management decided to start Middle East operations and sent me to Dubai in 2009.
In 2015, I decided to make a switch to the insurance industry, working with Oman Insurance.
Q: What investment sectors and funds have been popular with clients this year?
A: I think looking at our clientele, Asian and emerging market (EM) funds have always had a strong buy-in even with the high volatility. Equity is still the preferred asset class, but we see an increasing demand for alternate or bespoke strategies.
Something new that is coming up now are ESG funds as a concept. From our perspective, we still believe in equity as the best option for retail clients to beat inflation. We are also promoting regular savings against lump sum investments, which is the best way to create long-term wealth in my opinion.
Q: Can you describe any specific calls that have paid off?
A: Since we are in long-term savings, short-term calls are not our focus. However, for a few high-net-worth individuals, our advisors did advise them to move into certain commodity offers from small-cap equity, which was a short-term benefit.
From a long-term basis, we continue to believe in equity and focus on countries like India and EMs which we believe is where the growth lies.
Q: What investment themes are you keeping an eye on?
A: I am looking at certain ETFs and thematic strategies which look interesting.
Q: What are essential traits for a fund manager?
A: I think a fund manager should be able to work with relationship managers rather than spending time with product or investment teams. I encourage all our partners to spend time with the sales team.
A few fund houses have listened to us and have been successful in raising assets. A strong relationship with sales is the key to fund management businesses. Of course, the performance of the funds matters but past performance is not the only tool to measure future performance.
Another concept that we encourage fund houses to do is to address clients directly through investor meetings. Most of the fund houses have budgets or legal issues to conduct such events but this is important to increase penetration among retail clients.
Q: What do you expect from the foreign fund managers you work with?
A: Have a local presence in UAE. This is also a criterion in our on boarding process. Of course, the willingness to invest in the distribution model through engagement should also be there.
Q: How many funds are on your platform and how many fund groups do you work with?
A: We have around 200 active funds with 30-35 fund managers. We work closely with around 20 of them
Q: Is ESG a concern for clients?
A: It is not a concern as such. More and more clients are looking at a sustainable business to invest in and hence are looking for ESG funds. We expect it to grow steadily in the next few years.
Q: If you could ask a fund manager just one question, what would it be?
A: What is your strategy to increase penetration of your fund among the sales team and increase awareness of investments among retail clients?
Q: Do you work with many alternative managers?
A: Yes, but very few. Demand is there but there is still some time to go for strong net sales.
Q: How can regulatory authorities further facilitate the growth of the mutual funds industry?
A: I think regulation is the key for our industry. I am quite supportive of changing rules if it is clear and not impossible to run business.
One way for regulators to facilitate growth is to make it mandatory for funds to be registered in UAE and then control the investments. Currently funds are approved if it is in an equivalent jurisdiction.
Q: If you could choose an alternative career outside of finance, what would you do?
A: Maybe a lawyer. I love to get into constructive debates. My family is in business and that was also a strong career option for me before I joined this industry.
Q: What’s the toughest part of your job?
A: To manage the expectation of clients and distributors and still achieve strong bottom line growth. The market today is very demanding, and everyone wants a deal!
This is true for local companies like us since we compete in the same space as international players who have a very strong brand. To compete against brands, we need to constantly upgrade our products and services to manage expectations.
Q: Where’s your favourite place to visit in the region?
A: I love Dubai, though occasional trips to Oman are also refreshing.
Q: What’s the best piece of career advice you’ve been given?
A: Be honest and transparent. It is always a short-term pain and long-term gain model. Long term always pays off and has a compounding affect.
Q: What is your funniest/strangest fund manager due diligence meeting?
A: This local fund manager asked me on how to achieve the AUM criteria when OIC does not onboard below a certain value of assets. I told her that she needed to work with a few smaller firms before approaching us.
She called me back 6 months later to inform me that they now have the assets. I asked her about the other criteria, and she got very upset with me as she focused only on the AUM. That was quite a strange experience for me.
This interview first appeared in the Citywire Middle East 2019 fund selector supplement.