FIIs turn to domestic fund managers

Foreign institutional investors (FIIs), including pension funds, sovereign wealth funds and family offices, are hiring Indian asset management companies (AMCs) to manage their India portfolios.

SBI Mutual Fund, Birla Sun Life, Reliance Mutual Fund and UTI MF are among those who have bagged such assignments. “This is an emerging trend and we are seeing a big growth opportunity,” said Sundeep Sikka, CEO of Reliance Mutual Fund.

There is a growing realisation among global institutional investors across geographies that onshore fund managers have the core expertise and better understanding to take a call on the Indian market compared to an offshore fund manager based in Hong Kong or London, he said.

Birla Sun Life Mutual Fund CEO A Balasubramanian said the number of queries from foreign institutions to manage both bond and equity portfolios had increased in the last 5-6 months. “Already, $50 million has flowed into various schemes. Apart from our expertise on active portfolio management we are also advising them on other accounts,” he said.

Most global investors normally mandate an emerging market or Asian market fund manager to manage regional portfolio.

These fund managers are typically based in overseas jurisdictions such as London, Hong Kong or Singapore.

Industry experts also attribute this emerging trend to overseas investors’ growing interest in small- and mid-cap stocks.

“A lot of institutional investors across the globe now want to invest in the Indian market. And to have a closer coverage of the universe of stocks listed in India, domestic fund managers are being favoured as they have been tracking them for a longer period of time,” said Jaideep Bhattacharya, chief marketing officer of UTI Asset Management Company.

At present, there are close to 1,750 FIIs and 5,600 sub-accounts registered with the Securities and Exchange Board of India (Sebi).

In 2010 till date, they have purchased $28.66 billion worth of Indian equities and another $10.16 billion worth of domestic debt instruments.

Source: http://www.financialexpress.com/news/FIIs-turn-to-domestic-fund-managers/711741/