The Hindu Business Line : Feeder funds coming, to whet investors' appetite

The SEBI Chairman, Mr G.N. Bajpai (centre), along with the AMFI Chairman, Mr A.P. Kurian (left), and the Alternate President, Assocham, Mr Anil K. Agarwal, at the 3rd National Summit for Wealth Creation with Mutual Funds, in Kolkata on Saturday. — Parth Sanyal

Kolkata , Aug. 21

FEEDER funds may well be the next big thing for Indian investors looking at opportunities abroad. The Association of Mutual Funds in India (AMFI) is strongly pushing the idea, supported by a few local players who have already expressed their willingness to explore the possibility of developing the right products.

Feeder funds, according to AMFI, will be structured in the domestic market and domiciled in India.

These will take exposure to other investment products, subject to prescribed limits.

A few major players, including Franklin Templeton and Birla Sun Life, are ready to test the waters, Mr A.P. Kurian, Chairman of AMFI, indicated. Feeder funds will whet the appetite of investors who are keen to check out newer, smarter options, he added.

A section of the investing population is already trying out fresh alternatives, including schemes that have been lined up by at least two players. The first is a vehicle, managed by Franklin Templeton, which invests in a US fund dedicated to government securities.

The second (and of more recent origin) is an equity fund, offered by Principal PNB that invests in European, Japanese and US stocks.

Speaking at a meeting organised by Assocham, Mr Kurian pointed out that only a small section of all Indian households invests in MFs, compared to a very high percentage in the US and certain other countries. Competition for funds comes by way of traditional products offered by banks and post offices.

However, the reduction in returns provided by such players is one of the compelling reasons why investors should look at MFs more seriously.

The Indian MF scenario now features a wide range of options, many of which are also available in other markets.

India, however, is yet to have real estate and commodity funds, which local players must provide in the long-term, the AMFI chief felt.

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