Business
European asset manager Amundi targets India debt with two recent fund launches
Global Banking & Finance Review®
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By Dharamraj Dhutia
MUMBAI (Reuters) – Amundi Investments, Europe’s largest asset management firm, plans to increase its exposure to Indian debt through its recently launched funds focusing on the country’s fixed income market, officials at the asset management firm said.
To add to the dollar-denominated exchange-traded fund (ETF) launched in September, the fund house launched the rupee-denominated India Bond Fund earlier this month.
“The product is an unconstrained product … so it provides quite a lot of flexibility to invest into state bonds as well as corporate bonds along with the traditional government securities,” said Rajiv Nihalani, senior emerging markets investment specialist.
This fund will first approach institutional investors in Europe and Asia and then in Latin America towards the end of the year, Nihalani said.
India is just “scratching the surface in terms of flows”, says Nihalani, and there is a lot of growth ahead, which makes it the right time to launch.
While the ETF has a weighted average duration of 6.4 years, the India Bond Fund would target an average duration of seven to eight years, with eyes on monetary policy easing in the first half of 2025.
Foreign investors have poured in over $17 billion into Indian bonds since September 2023 when JPMorgan said it would include this debt into its emerging market index.
However, they have been moving out this month, with net sales of around 80 billion rupees ($947 million) from bonds under Fully Accessible Route (FAR), most of which are a part of JPMorgan’s index, on easing bets of aggressive Federal Reserve rate cuts.
The ETF will solely track the bonds under FAR, whereas the India Bond Fund will widen its investment horizon.
“We can also target the high yield space … up to 40% of the fund could be invested into corporate bonds.” ($1 = 84.4920 Indian rupees)
(Reporting by Dharamraj Dhutia; Editing by Savio D’Souza)
Fixed income refers to investment securities that provide returns in the form of regular, or fixed, interest payments and the return of principal at maturity. Examples include bonds and treasury bills.
Corporate bonds are debt securities issued by corporations to raise capital. Investors receive periodic interest payments and the return of principal upon maturity.
Emerging markets are economies that are in the process of rapid growth and industrialization. They often offer higher potential returns but come with increased risks.
Asset management is the systematic process of developing, operating, maintaining, and selling assets in a cost-effective manner. It involves managing investments on behalf of clients.
An ETF is a type of investment fund that is traded on stock exchanges, similar to stocks. It holds assets such as stocks, commodities, or bonds and generally operates with an arbitrage mechanism.
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