Business Today

"Crises come and go"

Among the largest Europe based asset managers, AXA Investment Managers manages $830 billion or Rs 33.2 lakh crore (December 2007) in assets. AXA Investment Managers Global CEO Dominique Carrel-Billiard was in the country recently even as its domestic joint venture, Bharati AXA Asset Management, received SEBI’s nod to roll out mutual fund products for the Indian market. In a conversation with Mahesh Nayak, Carrel-Billiard spells out his plans for India, the effect of the subprime crisis, and lots more.

     Print Edition: May 4, 2008

Dominique Carrel-Billiard
Dominique Carrel-Billiard
Among the largest Europe based asset managers, AXA Investment Managers manages $830 billion or Rs 33.2 lakh crore (December 2007) in assets. AXA Investment Managers Global CEO Dominique Carrel-Billiard was in the country recently even as its domestic joint venture, Bharati AXA Asset Management, received SEBI’s nod to roll out mutual fund products for the Indian market. In a conversation with Mahesh Nayak, Carrel-Billiard spells out his plans for India, the effect of the subprime crisis, and lots more. Excerpts:

You have been diversifying into Asia, including India, recently. What’s the reason for the shift in focus?
When you look at the world of asset management, which is about $25 trillion (Rs 1,000 lakh crore), the US comprises about 50 per cent of the market, Europe 25 per cent, and Asia, including Japan, the rest. But the growth is mostly in Asia, which outpaces the growth in Europe and the US. The business environment is undergoing a structural change. That’s why we have focussed on Asia.

What is your global business strategy?
We approach individuals as well as institutions with a product range that can accommodate all their asset management requirements. An investor needs to have a portfolio approach not only in equities but also in fixed income. And as markets globalise, so do investors, and so we have to reach out everywhere.

What is your assessment of the current markets?
Markets always go through different cycles. You have to keep track of your long-term goals. It’s the right way to shape your portfolio.

When do you see the dust from the subprime crisis settling down?
Credit, like equities, goes through cycles. But this cycle has happened in a global economy and has been spread out, which is what is making it a bit different. Unlike the Asian crisis of 1997-98, this time it’s the western economies that are hit. But the magnitude of the impact is less than 1 per cent of GDP. So, it’s not a catastrophe. It’s a liquidity crisis. It’s a reflection of the fact that you cannot get supply and demand to agree on a price of a given product. So, it’s a confidence crisis, and not a solvency crisis. You have to allow time to pass by. Credit markets may be exaggerating the depth of the solvency issue. The real subprime issue came out only in July 2007, so it’s been going on for nine months. I think it will take a few more months before it clears out.

What do you think of the decoupling theory? Are the stock markets co-related?
There are many different theories going around on this. But there are asset classes and investments that are less co-related. In times of real crisis and intense pressure on the markets, the correlation tends to be higher. Crises come and go. But diversification works pretty well over time.

What’s your strategy in the markets now?
Globally, the markets are in turmoil due to the credit crisis. We are overweight on cash at the moment, and neutral to underweight on equities, and neutral on bonds.

What are your plans for India?
We jointly (with Bharti group) want to bring better financial services products to India. To start with, we want to bring a core offering of domestic products for domestic investors. As we establish ourselves in this market, we will develop more products. We can later import our international products, that we manage elsewhere, into this country and also sell products managed here in the overseas markets.

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