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Thursday, Feb 19, 2004

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Feel good! Global mutual fund products soon at your doorstep

Veena Venugopal

Mumbai , Feb. 18

SO what if you are living in New Delhi, your money could be growing in New York!

Global mutual funds and insurance schemes will soon be available to local investors. Fund houses are in the process of empanelling distributors to enable them to sell international funds in India.

After the Finance Minister's announcement allowing Indian nationals to invest up to $25,000 abroad per year, mutual fund and insurance companies are seeking ways to allow their distributors to market global products in India.

For the investor, this would mean that a plethora of global investment instruments - over 36,000 mutual funds in the US alone, medical insurance for prolonged illness, high-yield pension funds and reverse mortgage are possible options for investment.

"Foreign banks already allow their high networth individuals to invest abroad, the empanelment of distributors has to be effected quickly to ensure fair play among all investors," says Mr Gaurav Mashruwala, Director, ACE, a financial planning company.

Foreign regulations and certification requirements are being studied to ensure proper roll out. "While certification from the Association of Financial Planners is recognised in 19 countries - including US, large parts of Europe and Asia-Pacific, there is a further requirement of registered investment advisor (RIA) to be able to earn a commission from selling financial services in America," says Mr Devang Shah, Director, Right Returns.

Mr Sanjay Prakash, Chief Executive Officer, HSBC Mutual Fund, says that these products would be rolled out within the next two months.

"For countries that already allow foreign investments, it has been observed that rules of investment advice and certification requirement of the country where the investor and advisor are domiciled in, would be applicable. This should be the same for India, as well," he says.

The Association of Mutual Funds India (AMFI) is setting up a committee to study the opportunities that asset management companies in India can optimise on global investments.

Mr Alok Vajpeyi, Chief Executive Officer, DSP Merrill Lynch, will head this committee. "The committee will look into end-to-end requirements to ensure investor protection and AMFI will publish the guidelines subsequently," said Mr A.P. Kurien, Chairman, AMFI.

Industry leaders are keen to roll out products to enable the investment of $25,000, but are wary of the regulatory and legal implications of the same. "Will the investors be protected by Securities and Exchanges Board of India or by the Securities and Exchanges Commission, in case of a grievance against an American entity? What are the anti-money laundering practices to be adopted? These are questions that would need definitive answers before a commitment is made," says the Chief Executive Officer of an asset management company.

In the interim, financial planners are exploring global regulations themselves, as this would ensure that they become one-stop advisors to all the clients' requirements.

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