Jitendra Arora, Senior VP - Investments (Debt), ICICI Prudential Life Insurance

"We have nearly Rs. 50,000 crores invested in debt and debt related products as on February 28, 2015.We believe that Indian equity and debt will deliver over the next 3-5 years."

March 21, 2015 12:34 IST | IIFL
Jitendra Arora, Senior Vice President – Investments (Debt), ICICI Prudential Life Insurance, is a Senior Vice President - Investments at ICICI Prudential Life Insurance, where he directly manages large fixed income portfolios of policyholders’ funds. Additionally, he is involved in investment risk management that addresses market risk, credit risk, liquidity risk, ALM etc.He holds a Bachelors degree in management and is an alumnus of IIM Bangalore.
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a premier financial powerhouse, and Prudential plc, a leading international financial services group headquartered in the United Kingdom. ICICI Prudential Life was amongst the first private sector insurance companies to begin operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA). ICICI Prudential Life's capital infused stands at Rs. 48.01 billion (as of December 31, 2014) with ICICI Bank Ltd. and Prudential plc holding 74% and 26% stake respectively. For 9m-FY2015, the Company garnered a total premium of Rs. 100.10 billion. The Company has assets under management in excess of Rs. 945.93 billion as on December 31, 2014.
Replying to Yash Ved of IIFL, Jitendra Arora says "We have nearly Rs. 50,000 crores invested in debt and debt related products as on February 28, 2015.We believe that Indian equity and debt will deliver over the next 3-5 years."
What is your view on the announcements made in the Union Budget?
We see this budget as a tough balancing act that has been successfully executed by our Finance Minister. This budget seems like an effort to de-bottleneck the system in order to kick-start growth while ensuring that this growth is not too inflationary in nature as the spending is being directed towards infrastructure that has the ability to improve the potential growth of the Indian economy. Over and above, the numbers are very credible and we are unlikely to see an expense cut towards the end of the next fiscal in order to meet the deficit as we have seen in recent years. Further, the medium term focus of the budget, like providing compensation for implementation of GST, better channelization of overall subsidy and reduction in corporate tax rate is also encouraging. Now the government has to build on this budget and continue the reforms process to further improve the economic fundamentals.
What is your outlook on the debt market? What is your take on interest rates?
We are quite positive in the overall debt markets from a medium term perspective. With the formal inflation targeting in place we believe that the overall average inflation levels should move lower in India and that is a big medium term positive for the debt market as interest rates have a high dependence on inflation and inflationary expectations. RBI is likely to cut rates further as we move towards this lower inflation. Further, the FII interest remains strong in buying Indian debt securities on account of high rates and stable currency. This should also help the demand in debt markets. Finally, with the overall deficit reducing over the next 2-3 years, the demand-supply are likely to be well balanced and support the overall debt markets. The risks are more on account of global factors like fed rate hike, geopolitical tensions etc.
What is your total investment in debt/debt-related products?
We have nearly Rs. 50,000 crores invested in debt and debt related products as on February 28, 2015.
How do you see RBI’s surprise move of 25 bps repo rate cut?
RBI’s timing in the rate cut was the only surprise for the broader market. The market was expecting a cut in the April policy however not one in March. Further, some of the market participants were not happy with the cut outside policy as they believe that it undermines the importance of the policy per se. We believe that a rate cut was warranted and expect further cuts of at least 50 basis points in the next six months.
What is your AUM?
Our total AUM is in excess Rs. 1 lakh crores, as on February 28, 2015.
Your views on the asset allocation strategy for the retail investor given the backdrop of the budget and the bullish trend prevailing in the equity markets.
We believe that Indian equity and debt will deliver over the next 3-5 years. Indian debt yields are likely to go down over the next 12 months and equity is likely to do well over the next 5 years, as reforms take hold. As long-term investors, we believe in the virtue of long-term asset allocation rather than short term movement from one asset class to other. We believe, an investor needs to hold a mix of asset classes, including debt and equity, in their savings portfolio, based on their overall risk-return objectives. Investment time horizon, life stage, goals, risk appetite are some of the factors that can impact the asset allocation. Systematic and regular investment as per the chosen asset allocation, will prove beneficial for the retail investor over the long-term.

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