Business Daily from THE HINDU group of publications
Wednesday, Apr 25, 2007
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Business Daily from THE HINDU group of publications Wednesday, Apr 25, 2007 ePaper |
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Mutual Funds Markets - Overseas Investments Industry & Economy - Credit Policy Our Bureau
Kolkata April 24 The raised ceiling on overseas investment by mutual funds to $4 billion from $3 billion will encourage fund houses to create more international offerings. The asset management industry now waits to see how individual fund house limits will increase, a measure that is expected as a follow-up. Mr Rajan Krishnan, Business Head - Asset Management, Principal MF, feels that the latest RBI measure will help provide greater leeway for asset allocation, not only across asset classes but also across regions. However, this will also bring in more competition, even in the limited international investing space that is opening up for Indian fund houses, he added while referring to Principal Global Opportunities. The latter is the first product of its kind in India and now invests in emerging market equities, courtesy its association with Principal Global Investors. Fund houses will now look forward to signals from SEBI on the matter, especially with the hope of stepping up activity on the international front. Indian funds have seen the local equity market performing well over the last few years. However, diversification remains important in the context of volatility in a single market. The idea is to see whether there can be a useful hedge against country-specific downside, noted Mr A.P. Kurian, Chairman of AMFI. Ms Ashu Suyash, MD and Country Head, Fidelity MF, said the increase in the overall limit, as well as a 100 per cent hike in the limit for remittances overseas for individuals to $1,00,000 are strong signals that the country is set on course for overseas investing. "We are also keenly awaiting the guidelines that will tell us how much the individual fund house limits will increase following today's announcement," she said. Mr Vivek Kudva, President, Franklin Templeton MF, said that Templeton India Equity Income Fund was launched last year to help investors diversify across countries. The fund can have up to 35 per cent overseas exposure.
Principal weighing new options
Principal MF will try to establish how best it can gain from the central bank's latest stance on overseas investment, courtesy value-added options. "This gives us greater scope to consider more possibilities," Mr Krishnan said, adding that the character of its global product will not change. It, in fact, has been lately repositioned and now invests in an emerging-markets equity fund managed by Principal Global Investors. Franklin Templeton also offers a product — Equity Income Fund — aimed at a limited exposure to international markets. This has partially invested in stocks listed in countries like Taiwan, Brazil, South Korea and Turkey.
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