India fund assets swell

$1.12 billion pumped in since January.

Global investors, perhaps impressed with the India shining story, have put in so much money into India-dedicated funds that the latter's assets have swelled by 53 per cent since the beginning of the calendar year.

Such equity funds have received an eye-popping $1.12 billion of total inflows since January this year, which is more than 28 per cent of the total money flowing into Asian (ex-Japan) funds.

According to Massachusetts-based EmergingPortfolio.com Fund Research, the total flows into funds investing in Asia are $3.97 billion so far this year, compared with $5.2 billion in all of 2003.

During the seven-day period ended April 21, India-dedicated funds received inflows of $105.2 million, which was nearly half of the $237.9 million that went into funds investing throughout Asia.

Brian Durham, director of Emerging Markets Portfolio.com, said India was a major driver for funds flowing into Asia. Compare this with Korean country funds, which received $36.8 million during the week.

There are about 20 India-dedicated funds in the US and Europe. The general consensus is that there is a lot of steam left in the market for investors to make decent returns.

According to a recent Merrill Lynch survey of global fund managers, many fund managers believe that the Sensex is still 10 per cent undervalued.

The survey says the majority of fund managers expect the Sensex to climb to 6,700 in the next one year. Most of the gains are expected to come through portfolio inflows, even though fund managers are aware that domestic inflows into the markets may slow down.

The driver for more FII inflows is also the rupee's appreciation, which is expected to continue throughout the year and possibly negate any increase in interest rates in the US.

Strong act

• India funds have bagged over 28 per cent of the fresh money flowing into Asian (ex-Japan) equity funds.
• The total flows into funds investing in Asia are $3.97 billion so far this year, compared with $5.2 billion in all of 2003.
• During the seven-day period ended April 21, India-dedicated funds received fresh inflows of $105.2 million, which was nearly half of the $237.9 million that went into the funds investing throughout the Asian region.