MC EXCLUSIVE Jio BlackRock CEO backs index investing, but will straddle active strategies too

Jio BlackRock's MD and CEO Sid Swaminathan, who previously managed more than $1.2 trillion across 500 index portfolios at BlackRock, stressed that tracking an index “is hard work” and requires minimising both transaction costs and market impact, especially during rebalancing.

Sid Swaminathan, the chief executive of Jio BlackRock, sees a long runway of growth for India’s index investing market but says the firm’s strategy is to offer both active and passive products to suit a wide spectrum of investors. “It’s not active versus passive — it’s active and passive,” Swaminathan said in an exclusive interview with Moneycontrol.

“Indexing in India still has a long runway. The share of passive funds is in the high teens, maybe approaching 20%. In Europe it’s 33–35%, and in the US it’s been about 50% for a while. Those global trends are still continuing despite some of the challenges people point out.”

As of now, Jio BlackRock has launched eight mutual funds in India: three debt/cash funds, followed by five passive index funds including four equity index funds. It had launched only one active equity flexi-cap fund.

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Asked about the flaws of index investing, such as index concentration risk, herd behavior and market-cap bias, Swaminathan acknowledged the problems, but said that hasn’t slowed adoption globally, and India’s index investing runway still has a long way to go, going by international standards.

Still, Jio BlackRock’s proposition in index funds won’t rest solely on scale. Swaminathan, who previously managed more than $1.2 trillion across 500 index portfolios at BlackRock, stressed that tracking an index “is hard work” and requires minimising both transaction costs and market impact, especially during rebalancing.

To do that, the joint venture is leaning on BlackRock’s Aladdin platform, a technology system used to manage trillions of dollars globally. Aladdin integrates portfolio risk models, scenario analysis, and trading execution, enabling index managers to take a strategic approach to large trades and corporate actions.

“Ultimately, an index fund manager is trying to deliver the index return with minimal tracking difference,” Swaminathan said. “We focus on that difference — how closely the fund’s actual returns match the benchmark — and with Aladdin’s capabilities, we believe we can keep that gap tight and consistent.”

While Jio BlackRock has just launched its fund schemes, Swaminathan’s goal is to be “best in class” in index quality, offering top-tier tracking performance at a competitive price.

That combination of quality and affordability, he says, creates the most value for customers. “It’s not about being number one on a metric,” Swaminathan said. “If you deliver the right returns at the right price, the customer gets the value — and that’s what matters.”

Even with a bullish view on passive strategies, Swaminathan stressed the firm will also bring active funds to market to cater to different investor profiles, from retail savers to corporate treasuries. “The strategy is to be available for all investor types and all investment styles,” he said. “That’s how we’re approaching the market.”

Watch the entire video interaction right here on Moneycontrol.

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