The Hindu Business Line : UTI ties up with State Street to offer global MF products

UTI Mutual Fund and State Street Global Advisors have entered into an exclusive tie-up that will lead to the formation of schemes aimed at Indians willing to invest abroad. State Street is the world's largest institutional asset management outfit. The two signed an agreement in Kolkata on Thursday.

State Street, which will charge a fee for its services, will serve as an advisor to UTI MF for international investments by its funds. The products that will be developed will have to follow the norms set by regulatory organisations in India.

The tie-up with State Street will enable UTI MF to provide more choices to its clients, especially those who wish to invest outside the country, Mr M. Damodaran, CMD, told newspersons. ``The arrangement with State Street will help us to add to what we are already trying to do in India,'' he stated. The first product is expected to be announced soon.

Mr Vincent Duhamel, MD, State Street Global Advisors Asia Ltd, said his company would rely on the distribution strengths developed by its Indian partner.

``We have a wide range of products. As on end December 2003, more than 70 per cent of our active strategies outperformed the markets for three-and five-year periods. As for our alliance with UTI MF, we will handle critical investment advisory functions,'' he said.

State Street, he added, is currently responsible for $1.2 trillion in assets. In rupee terms, this amounts to Rs 54 lakh crore. Incidentally, the entire mutual fund industry in India handles around Rs 1,40,000 crore. UTI MF is the country's foremost asset management outfit, thanks to the Rs 20,000 crore or so it manages at this juncture.

Both parties have insisted that the deal will be purely strategic in nature. There will be no ``shared ownership'' of equity of any kind, nor will there be a joint venture. It may be mentioned here that SEBI has fixed the upper limit for investment by Indian MFs in global markets. The current ceiling is 10 per cent of net assets of each fund, subject to a cap of $50 million.

UTI MF is aware that more and more Indians are looking at overseas investment and the latest deal needs to be seen in this context, it is pointed out.

``UTI MF, which had been trying to identify a suitable partner for some time, had two important considerations. One, the partner has to be a large, global player. Two, it has to be an entity with a good track record. The issues that have come up in the US market, ones that question the credibility of fund managers, have not affected State Street,'' Mr Damodaran maintained.

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