Deutsche Asset Management has received its license from the Securities Exchange Board of India (SEBI) to offer asset management products to the Indian market, and has launched four domestic mutual funds.
DeAM executives have previously fingered India as their future growth market in the region, along with Korea. India&'s mutual fund market is $26 billion, of which only $4 billion is in the private sector. State Bank of India and Unit Trust of India dominate the rest, but are struggling and, in UTI&'s case, face being split by the government. There is also a $40 billion life insurance industry that offers future opportunities.
Fund managers expect pension deregulation, which has already begun with recent moves to allow foreign fund managers to invest up to 40% of their assets offshore in G3 bonds.
"We are confident that pension fund reforms by the Ministry of Finance, coupled with regulations allowing investment in offshore markets, will offer even greater opportunities for fund management companies in India," says Singapore-based Choy Peng-wah, CEO of DeAM Asia.
Sandeep Dasgupta, business head of DeAM in India, says the first funds will target high-end retail and corporate markets. Over the long run, the firm wants to offer structured investment products to the institutional market, he adds.
The firm is launching a mid- to large-cap equities fund, a bond fund investing in corporate and government debt and money market instruments, a short-term (less than 18 months) fixed-income fund and a money market fund.
Distributors include DSP Merrill Lynch, JM Morgan Stanley, Birla Sunlife Distribution, Bajaj Capital, Standard Chartered Bank, HDFC Bank, Tata TD Waterhouse, Kotak Securities, Mata Securities, SPA Securities and Karvy Securities.
DeAM manages over $771 billion, of which $70.8 billion is managed in Asia, including Japan. Deutsche Bank has operated in India since 1980.