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Dubai: Gulf investors, an emerging force on the Indian capital markets, earned substantial gains last year from both debt and equity funds, according to Lipper - an international fund-tracking firm.
Funds registered for sale in the Gulf region recorded an average gain of 19.26 per cent in 2007, with equity funds from India emerging as the second best performing category after equity funds from China, Lipper said in a report.
Indian funds grabbed as many as 19 positions among the 20 top performers, Lipper said in a recent report for GCC-registered funds. These included six funds from the Reliance Mutual Fund stable, four schemes each of UTI Mutual Fund and Birla Sun Life, three DSP-Merrill Lynch schemes and two HDFC Mutual Fund schemes.
Among the Indian funds, the rupee-dominated bond funds were the best performers in the bond category with about 20 per cent return while equity funds gave an average return of 71.08 per cent, against the overall average of 26.40 for all the equity funds.
High returns
Returns from the rupee-denominated general bond funds and government bond funds stood at 21.56 per cent and 19.79 per cent respectively. This, compared with an overall average return of 9.94 per cent for the bond funds.
Investors from the Gulf region are aggressively betting on the Indian market, the study said.
While non-resident Indians (NRIs) based in the Gulf account for most of the investments in rupee-denominated funds, other expatriates and Gulf nationals, institutions and sovereign wealth funds from the region are investing through dollar denominated funds.
"There is huge potential for Gulf investments on the Indian capital market. Apart from the NRI investments, all other investments are routed through dollar-denominated funds. If the leading Indian fund houses can aggressively market these funds, the volume of investments from the region would be much larger," said K.V. Shamsudin, director of Barjeel Geojit securities.
In all, there are nine dollar-denominated Indian funds available in the Gulf markets. Birla Infrastructure Fund, launched in 1995 at $10, currently has a net asset value (NAV) of $335. The other funds include three funds from Franklin India, three feeder funds from ICICI, Tata India Opportunity Fund and the newly-launched Reliance Emerging India Fund.
"The Indian rupee appreciated 10.65 per cent against the dollar over the year, inflating the performance of underlying Indian assets. NRIs who have exposure in dollar-denominated funds are gaining from both market gains and rupee appreciation," said Shamsudin.
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