‘Global investors want to buy Indian ETFs’

ZyFin Funds, a four-year-old venture capital-backed macro-analytics research firm, has announced the launch of its asset management arm. The company plans to sell exchange-traded funds (ETFs) based on underlying Indian products to global investors, for which it has received approval from the Central Bank of Ireland. The fund will be domiciled in Dublin and will sell mainly to European investors. Its first product will be a fixed income ETF, listed on the Frankfurt and London stock exchanges. In an interview to BusinessLine , Sanjay Sachdev, Executive Chairman, provides more details.

What is your goal with ZyFin Funds?

I’ve been in the mutual fund industry for many years, and seeing its evolution, I think everybody seems to have the herd mentality. There’s the 50th growth fund for India, and the 50th bond fund for India and the 15th gold ETF.

The opportunity for the asset management world is to think outside of the box and see where the opportunities are; how can we create avenues for investors to access markets more efficiently and at lower cost. And also, we found that in fixed income, the opportunity is as big, if not bigger, as that in equity. We found there are lots of gaps here and people aren’t focussing on this area.

Second, what we have noticed is that in the recent past, giving discretion to a fund manager can be extremely dangerous and volatile for investors. The idea was why don’t we develop an index that is upfront and give investors peace of mind. They know exactly where their money is invested.

At the same time, what we saw is that global investors do not have any access to Indian products.

We keep saying, a global investor can invest through FPI, but tell me how many people who are running small little businesses, or somebody working in a company, has the ability to set up an FPI to invest in India. The thing is, we have to bring the world to India, and if the world doesn’t come to India, India should go to the world.

Whom will you be focussing on — individual or institutional investors?

I go back to my original thesis, that it can be an individual, it can be an institution, it can be a large family office sitting in Switzerland providing access to somebody who doesn’t have access to India today. I know there is genuinely very large demand for investors in ETFs in India.

Will your focus be more on passive products, such as ETFs, and not on active fund management?

This is not about passive or active. This is to provide accessibility and what works best for investors. Most important is how I can provide value to investors. As ETFs are the easiest way to provide accessibility and convenience to global investors, we are into them now. And they are low-cost.

Can you tell us more about your debut fixed income product?

This is the first fixed income product in the world as far as India is concerned. The thing is, India cannot wait for JP Morgan to make a decision that India belongs to the fixed income universe.

There are investors who don’t have the patience and want to access the ETF market and India doesn’t provide that accessibility so easily now.

We will be providing more details in the next couple of weeks. And there will be a whole host of products coming over the next six months.

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