Reliance MF plans fund for overseas investors

Giving in to the lure of foreign investors who seem to show insatiable appetite for Indian equities, Reliance Mutual Fund today filed prospectus to launch a fund for overseas investors. Christened Reliance Emergent India Fund, the fund will open to investors in the US, the UK and West Asia.

Several other domestic fund management companies have been thinking of tapping this market for a while with limited success though.

UTI Mutual Fund and Birla Mutual Fund are the other domestic funds being advisors to off-shore funds although their fund size is not huge compared with their foreign counterparts.

These two put together manage less than $500 million compared with about $8-10 billion managed by leading foreign firms such as Morgan Stanley, HSBC and Merrill Lynch in India-dedicated funds.

With growing interest in Indian equities, there has been a growing demand for capable fund managers. "There is a lot of demand for fund managers with good track record and credibility. Domestic fund managers so far have managed to provide better returns than off-shore fund managers which make a strong case in favour of them," a mutual fund analyst said.

Despite the performance, domestic funds have not been able to grab a bigger share due to lack of distribution muscle and brand recognition.

"The corpus of our two off-shore funds has grown sharply in the past year on the back of sustained inflows powered by good performance of our funds. Our fund has been consistently ranked the best in the category by Standard & Poors," said S V Prasad, chief executive officer, Birla Mutual Fund.

Reliance Emergent India will have only one investor called Emergent which is a company incorporated in Mauritius in September 2004 with limited liability. This is the route taken by all domestic funds managing off-shore funds.