New window of opportunity for global individual investors, local AMCs

Jayanta Mallick Kolkata | Updated on February 28, 2011 Published on February 28, 2011

Experts and mutual fund industry officials feel that the Government's decision to allow foreign individual investors direct investment access to equity funds, floated by local AMCs, and to permit domestic mutual funds to sell such products abroad, will throw open a new window of opportunity for all.

Mr Naresh Makhijani, ED of KPMG told Business Line that the retail or high net worth individuals, who thus far have been investing in the “India story” in a very limited way through ETFs or a registered FII, would now have a new entry point.

He said the move would also provide a lifeline for the domestic mutual fund industry, which witnessed a drop in inflow in view of significant reduction in investor interest in the past couple of years.

It might stabilise overseas money flow at a higher level than the current one as investor base would enlarge, top officials of asset management companies pointed out.

Mr Arindam Ghosh, CEO of Mirae Asset Management, a local AMC with overseas principal and having a global distribution network, said: “We would wait with anticipation till the operational metrics are put in place”.

Market insiders believe that the market regulator, SEBI, would come out with detailed guidelines within next three months. “Regulatory preparations at the apex level have been on for some months with SEBI and RBI's involvement. There are working models to follow in the developed markets,” said a Government source.

Mr Ghosh said around 10 AMCs with global footprints of their principals or JV partners could grab the opportunity at the earliest in view of latent demand abroad for such Indian equity schemes.

Mr Makhijani said domestic AMCs were expected to tie up with distributors in foreign geographies. He assumed that in terms of dividend and capital gains taxes such schemes would be treated at par with locally marketed products. “The fine print would determine how soon the first NFO would hit overseas market,” Mr Ghosh added.

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Published on February 28, 2011
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