By Shruti Menon Seeboo
In an era defined by rapid economic shifts, geopolitical tensions, and technological disruption, the pursuit of sustainable growth and resilient portfolios remains paramount for investors. Speaking at the 2nd FinWise Annual Investment Summit in Mauritius, Mr. Adarsh Juwaheer, Fund Manager at MCB Capital Markets, elucidated MCB Investment Management’s strategic approach to navigating this complex landscape. His address underscored the enduring importance of diversification, active management, and a forward-looking perspective rooted in a deep understanding of global and local market dynamics.
A Legacy of Expertise: MCB Investment Management’s Foundation in Prudent Diversification
MCB Investment Management, established in 1998, stands as a cornerstone of Mauritius’s financial services sector, managing approximately MUR 348 billion as of 31st March. As a wholly-owned subsidiary of MCB Capital Markets, itself part of the venerable MCB Group (in existence since 1838), the firm leverages a rich legacy while pioneering modern investment solutions. Mr. Juwaheer highlighted the institution’s pioneering spirit, noting, “We’ve been among the first financial institutions to set up mutual funds back in the 1990s and we also been the first one to offer education and retirement plans in Mauritius and to launch a Mauritian-based ETF back in 2016.” This long-standing commitment to innovation and client service has cemented their position as a leading institutional investment manager and collective investment schemes specialist, duly licensed by the Financial Services Commission (FSC).
The bedrock of MCB Investment Management’s strategy lies in its rigorous governance and collaborative decision-making processes. Mr. Juwaheer detailed the comprehensive committee structure that underpins their investment approach. “We’ve got the asset allocation meeting that we sit together with various departments across the bank – Treasury, private banking, stockbrokers, everybody,” he explained. This cross-functional dialogue ensures a holistic, group-wide perspective on asset allocation, allowing for a robust framework within which individual fund strategies operate. This is complemented by a meticulous “security selection committee,” where analysts review existing and potential holdings, recommending whether to decrease, maintain, or increase exposure. A regular “fund selection meeting” further scrutinises mutual funds and ETFs, assessing performance against benchmarks and guiding tactical adjustments. Finally, the “CIS supervisory committee,” provides overarching oversight, with all fund managers regularly presenting and commenting on their respective portfolios.
The breadth of assets managed by MCB Investment Management reflects its comprehensive diversification mandate, spanning fixed income, equities, multi-assets, and alternative strategies. These diverse offerings are supported by a robust internal administration team handling fund accounting, portfolio valuation, investment administration, and regulatory compliance. Mr. Juwaheer listed their product suite, including CIS, ETFs, large discretionary and non-discretionary management mandates, and investment advisory services, all underpinned by the “in-house support that we get from MCB Capital Markets across the functions of IT, compliance, risk, accounting, and legal.” This integrated structure enables seamless operations and robust risk management, forming a solid foundation for their investment endeavours in an increasingly volatile global economy.
Adapting to a Dynamic World: Engines of Growth and Positioning for Structural Change
The investment landscape is in perpetual flux, necessitating constant adaptation and a nuanced understanding of evolving macro-trends. Mr. Juwaheer emphasised that while the MCB General Fund’s core diversified structure has remained consistent, “the engines in each side really have been evolving, and our eyes reflect that.” He pointed to the stark contrast between the inflationary pressures of the past, often debated as debt-driven, and the “sick volatility between economic and financial markets” witnessed since 2022, exacerbated by geopolitical conflicts like the Russia-Ukraine war. These shifts, alongside emerging trends such as artificial intelligence and the resurgence of protectionist trade policies, underscore why “diversification is really, really key these days.”
Mr. Juwaheer detailed four key “engines of growth” driving their portfolio positioning for structural change and global expansion:
Firstly, the dynamic interplay of deglobalisation versus globalisation. He acknowledged the impact of tariffs and the rising trend of “friend-shoring,” where supply chains are reoriented towards politically aligned nations. “When we see such things, we do increase our positioning in those particular countries,” he explained, citing the US, UK, and India as beneficiaries. This strategic pivot allows them to capitalise on shifts in global manufacturing and trade flows, ensuring their portfolio remains aligned with emergent economic realities rather than historical paradigms.
Secondly, AI and digital transformation represent a profound, long-term secular trend. Mr. Juwaheer stressed a cautious approach, distinguishing their strategy from mere “following the hype.” He stated, “Many years ago, we had identified a particular trade which is in line with AI and digital transformation.” This proactive identification led to early investments in areas like robotics and, locally, in companies like MCB itself, which is undergoing significant digital transformation. This focus on enduring structural growth, rather than fleeting market fads, underscores their disciplined investment philosophy.
Thirdly, the green transition and ESG factors have moved from niche considerations to mainstream imperatives. While ESG has gained prominence in the last decade, Mr. Juwaheer revealed that MCB Investment Management has long integrated these elements into their decision-making. “It wasn’t really called ESG back at the time,” he noted, explaining their long-standing aversion to polluting industries (environmental), their assessment of companies’ community contributions (social), and paramount emphasis on sound corporate governance (governance). “There’s a string of stocks that we haven’t invested in or stayed under-weighted because we didn’t believe in the management, we didn’t believe in matching up their words,” he affirmed, highlighting their rigorous, values-driven approach to investment selection.
Finally, demographic advantages play a crucial role in their long-term outlook. Observing the challenges faced by ageing populations in economies like Japan and European countries, which necessitate investments in health-related stocks due to increased healthcare spending, Mr. Juwaheer contrasted this with the opportunities presented by younger, emerging economies like India and China. “Over there, we’re going to pursue other avenues for growth,” he stated, illustrating how demographic shifts directly inform their geographic and sectoral allocations. These four long-term trends form the core of MCB Investment Management’s forward-looking strategy, focusing on quality global champions and sectoral leaders to ensure resilient, compounding returns.
Building Robustness: Resilience, Portfolio Construction, and Risk Management
Beyond identifying growth avenues, MCB Investment Management places a profound emphasis on building robustness and resilience into their portfolios, recognising that the future is inherently unpredictable. “It’s really not about predicting the future now, rather than just be prepared for a range of scenarios that can really affect you,” Mr. Juwaheer asserted. He referenced the unprecedented impact of events like the COVID-19 pandemic, stating, “Nobody could have prepared us for COVID.” This philosophy drives their approach to fixed income, duration discipline, and diversified equity exposure.
Their fixed income strategy is designed for stability and yield optimisation. They meticulously build their bond portfolios, incorporating government bonds, corporate bonds, and high-yield instruments. The process involves diligent credit spread analysis and interest rate forecasting. “Together with all the analysts, we have to project where we all believe that interest rate is heading and there on take the decision whether to buy into floating or fixed-rate products,” he explained.
In the relatively nascent Mauritian corporate bond market, MCB Investment Management has cultivated a strong database, allowing them to engage proactively with issuers on pricing. Mr. Juwaheer shared an anecdote about a corporate bond issuance where, armed with their historical data, they successfully challenged initial pricing, demonstrating the value of thorough research. This disciplined approach aims “to really try to optimise yield curve exposure for maximum yield enhancement,” while maintaining active trading relationships with primary dealers to ensure pricing advantage and flexibility. Crucially, they always maintain ample liquidity, “to be able to add satellites whenever we can, to offer usability and agility in our yield enhancement strategies,” a lesson strongly reinforced during the COVID-19 liquidity crunch.
In equities, their approach focuses on long-term compounding from “quality global champions and sectoral diversities.” This includes a broad range of international holdings in sectors like digital transformation (Alphabet, NVIDIA, Meta), industrial productivity (Schneider Electric, Siemens), and pharmaceutical innovation (Roche). Recognising the burgeoning consumer class in emerging markets, their portfolio also features leading Indian and Chinese companies such as ICICI Bank, HDFC, Reliance, Tencent, and SMC. For Mauritius, their strategy is similarly focused on companies with “strong barriers to entry,” like those in infrastructure (Rogers), or those with robust management and organic growth potential (MCB, CIEL, ENL, Beachcomber Resorts). Mr. Juwaheer highlighted the evolution of local industries, citing how sugar cane producers like Alteo and Omnicane have diversified into energy, becoming “one of the top independent power producers in the country, providing electricity to our homes.” This blend of global and local insights ensures comprehensive market coverage and resilience across geographies and industries.
The MCB General Fund: A Testament to Consistent, Less Volatile Returns
When presenting the performance of the MCB General Fund, Mr. Juwaheer underscored a core philosophy: it’s not about topping league tables, but about delivering stable, less volatile returns consistently over time. Referring to a visual representation of the fund’s performance against various market indices, he clarified, “What I want you to follow is rather the red one, which is MCB General Fund… we’re not trying to top the league, but it’s different asset classes and different levels of risk that we are looking at.” He stressed, “with the General Fund, what we are trying to do is try to be right there in the middle, to provide you with a stable kind of return and less volatile compared to the rest of the market. And that’s what we have been trying to do for so much time. And that’s the message is rather consistency over time.”
This commitment to stability is particularly pertinent in the context of inflation, which steadily erodes purchasing power, a challenge many retail investors face when their savings remain in traditional bank accounts. “When you meet a lot of people in the retail sector, they tell you money has been sitting in the bank just earning interest. And you know, whatever we say, inflation is always creeping up your savings,” he observed. The MCB General Fund, with its diversified approach, aims to compound returns over time, acting as a crucial hedge against inflation. Since its inception, the fund has delivered a return of 7.3%, demonstrating the power of a diversified portfolio to generate real returns beyond inflationary pressures.
Responding to a question on alternative assets, Mr. Juwaheer clarified that while some alternative investments like gold ETFs or real estate investment schemes might be classified under equity for reporting purposes, the fund does hold direct alternative allocations, typically in the 5-7% range. Regarding asset allocation evolution, he stated, “Our asset allocation, should we try to be 60% fixed income? But depending on different market cycles within, it’s going to be 70 or even 80, if you feel that the market is giving us much more reward.” He further explained, “When we feel that volatility is starting to creep in… then we start reducing, allocating all to fixed income.” While their baseline tends to be a 60/40 split (60% fixed income, 40% equity), their approach is dynamic, adjusting based on market cycles to ranges between 60% and 80% fixed income to optimise returns while managing risk.
In conclusion, Mr. Juwaheer’s address painted a clear picture of MCB Investment Management as a firm deeply committed to disciplined, diversified investment management. Their approach, honed by decades of experience and informed by rigorous internal processes, aims not for speculative gains, but for stable, compounding returns that safeguard and grow client wealth through all market conditions. Their focus on structural trends, resilient portfolio construction, and consistent performance underscores their dedication to long-term value creation in the ever-evolving global financial landscape.
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