According to Vikas Khemani, Founder & CIO of Carnelian Asset Advisors, the market’s rapid growth, rising financialization, and expanding investor base will pave the way for multiple investment styles — from quant-driven models to value and fundamental approaches — to coexist and thrive.
Speaking on the sidelines of the APMI conference in Mumbai, Khemani noted that this is a natural progression seen in mature markets like the US, and India is now poised to follow a similar trajectory. Edited Excerpts –
Kshitij Anand: Well, just to start off from the APMI perspective, why do you think this is a necessary step towards creating a more holistic environment for portfolio managers?
Vikas Khemani: I think it is an evolving industry. It is a fast-growing industry, and a lot of new players are coming in, providing very customised, bespoke solutions for clients. As any economy evolves and grows, and wealth creation happens, you need alternative products suited to the needs of each customer.
So, this is a very good association of such people who are providing these services to clients. This association addresses many issues — from a regulatory framework perspective, a client interest perspective, and a manager’s perspective — and creates an environment to provide solutions to a lot of challenges and opportunities for growth.
Kshitij Anand: I remember that Carnelian as a group is more structured towards the Bharat mantra, or you could say the Bharat philosophy. How positive, how gung-ho are you right now on that?
Vikas Khemani: I am very, very positive. India is in one of the best wealth creation cycles we have ever seen. I feel that over the next 10 to 15 years, we will create a very sizable amount of wealth as a country. I consider myself lucky to be part of this cycle — all of us are.There is a multi-dimensional opportunity here. Huge wealth will be created, and the equity journey has just started. But not only in equity and debt — in multiple asset classes you will see the financialization of assets. So, I am very excited.
We have a fund called the Bharat Amritkaal Fund, which primarily captures high-growth opportunities during this period as India grows from a $4 trillion GDP to a $10 trillion GDP. That is a very, very big opportunity for us.
Kshitij Anand: I know it is a very basic question, but whenever we are with you, we definitely want to ask — market ka kya lagta hai? Because A) there are a lot of things happening on the tariff front. Obviously, we are seeing massive selling from FIIs at this point of time, but they are actually buyers in the IPO segment of the primary market. So yes, two love points coming in there — one is a hate and one is a love. What is your thought?
Vikas Khemani: FIIs have been selling for three to four years now, so it is not something new. Fortunately, domestics are buying, which is a great thing. Historically, domestics sold, FIIs bought, and they created the wealth. Now, this is a situation where… it is a good situation.
As the equity exposure of Indian households goes up — today it is about 5-6%, whereas 10 years ago it was 1% — I think in the next 10-15 years it will go to 20-25%. So, it is a long journey, and domestics are getting to buy stocks.
Foreigners will also come, no doubt in my mind. Especially when the Fed rate starts coming down, you will see a lot of money flowing towards emerging markets, and that is a journey we will see in times to come. I am not very worried about that.
Regarding tariffs, these are short-term issues. Indian exposure to US exports is very limited — $80 billion, which is very small. Of course, you want to get it sorted out, and it will get sorted out. Apart from the political theatrics, I guess it will settle down soon, because the fact of the matter is both India and the US need each other. Both are democracies, both are very open economies, and both are innovation-driven economies. So, it will get sorted out — it is just a matter of time, whether three months or six months. Meanwhile, I do not think it is going to be destabilising for Indian markets or the economy.
Kshitij Anand: Looking at the broader perspective, how do you see the industry evolving now? Because, as Mr. Tuhin Kanta and Ashishkumar Chauhan also highlighted, the industry has grown by leaps and bounds in the past four to five years. New products are coming in, a lot of quant-based methodologies are also pouring in, and every day we are seeing some new thematic fund getting launched. How do you see the industry evolving in the next few years?
Vikas Khemani: Absolutely. Like the evolution of every economy, as the economy evolves, markets get bigger and bigger, the heterogeneity of investors goes up, and so do the products, because needs change.
Somebody is happy to even make a 10% return, somebody is happy to make a 15% return, and somebody is looking for a 30% return. So, across all assets… And there are different styles — fundamental style, value style, quant style — each can create its own product and journey. That will happen. It is a very natural progression.
It is also happening because of high financialization and the changing needs of investors, and you will see it only getting bigger and better.
In many markets like the US, you have big $20, $30, $40 billion funds doing this kind of work. You will see the same thing happening in India.
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