The Hindu Business Line : SBI Mutual working with Societe Generale to roll out more products

THE asset management arm of State Bank of India (SBI) has started working with its overseas partner, Societe Generale, to develop new funds. On the cards are products that may have an international look and feel but customised to suit Indian investors.

SBI Mutual Fund has insisted on coming out with the right products, ones that would be best suited to local clients, according to sources aware of the development. The idea is to leverage the tie-up to reach out to a wider section of the market.

Mr N. Sethuram, Chief Investment Officer, SBI MF, confirmed that there will be a significant level of Indianisation.

"We will have to see how investors here can be served most effectively. That may well lead us to introduce actively-managed products in the local market," he said, adding that further details cannot be revealed at this stage.

SBI MF and Societe Generale Asset Management announced their partnership in July, which required SBI's stake in the MF to come down to 67 per cent.

The deal (involving over $35 million) is expected to bring in Societe Generale's expertise in a number of areas such as product development, research and investment processes, risk control, and compliance. It was also announced that SBI's extensive network would be utilised for distribution purposes.

Product development will be taken up as a priority, the sources said, citing some of the schemes that have been launched by the MF in recent times such as Magnum Contra and Magnum Emerging Businesses.

More recently, the MF has sought regulatory clearance for what looks like the country's first commodity-linked scheme.

The one entity that has lately been active on this front is UTI Mutual Fund, which has also recently established a strategic tie-up with State Street Global Advisors (SSgA).

The UTI MF-SSgA combine has already mooted two equity-oriented products, both of which are based on indices managed by Dow Jones.

However, these are yet to be approved by the regulators.

While passively managed schemes are said to have their own appeal, large sections of the Indian market, especially those willing to put up with risks, are tuned more to actively-managed options, Mr Sethuram said.

Passive management based on indices aims at mirroring the chosen benchmarks, while active management seeks to provide capital appreciation by outpacing such benchmarks.