The Hindu Business Line : Fund managers here seek overseas advice

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Kolkata Feb. 15 Think global, act local. Asset management companies with strong international antecedents operating in India are increasingly chanting this mantra in their bid to source inputs from their overseas investment bases.

The trend, attributed partly to Indians' new-found desire to include international securities in their portfolios, is more than ever a reality in mutual fund circles. And fundmen say they are looking at borrowing more than just ideas.

International Flavour

What is likely to add to the trend is the imminent increase in the number of foreign players in the asset management space, thanks to the arrival of several entities. The stage, sources feel, is set for the Indian fund industry, which has about 30 players, to acquire a greater international flavour.

Mr Ajay Bagga, CEO, Lotus India MF, is of the view that the trend may be evident even more in the days ahead, especially so because of greater demand for global securities in this country. Lotus itself has access to Fullerton Fund Management's experience; Fullerton is a subsidiary of Temasek Holdings of Singapore.

"This is not to say that Indian fund managers, working from their home bases, are not capable. They definitely are very sharp. But allocation by Indians in foreign securities will increase. This will call for greater attention to opportunities found in other markets," he maintained. The possible introduction of products based on or derived from international funds in the local market may also propel the situation further, it is pointed out. Already there are signals that fund houses are tapping their global counterparts on this count.

Overseas funds

Sources cite the recent move by DSP Merrill Lynch MF to introduce an open-end Fund of Funds (FoF) for investing mainly in units of Merrill Lynch International Investment Funds - World Gold Fund. The offer document (filed last year) had referred to at least 80 per cent allocation to overseas MFs.

The proposed fund, to be benchmarked against the FTSE Gold Mines index, was expected to identify mostly companies whose chief business was gold mining (as well as other precious metals/minerals). Fundmen also refer to the growth in India-specific funds, some of which depend on local advice.

There are also BRIC funds investing in stocks of companies based in Brazil, Russia, India and China.

Many of these have swelled in recent times, thanks to the kind of money that have flowed into them from overseas sources. These include HSBC's India fund, which has ballooned to giant proportions.

Mr Mihir Vora, Senior Vice-President, Head of Fund Management — Equities, HSBC MF, is of the view that such India funds are now firmly on their way to become important players. "In recent years, the growth (in this segment) has been exceptional. Investors domiciled elsewhere have taken to the idea very well," he said.

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