While the quest for new markets is leading more and more funds to seek distributors in smaller upcountry towns, more and more Indian mutual funds are also pushing outwards, i.e. to foreign countries with substantial Non Resident Indian (NRI) populations.
IDBI Principal Mutual Fund and Sundaram Mutual Fund have both started offering their funds to the 30 lakh strong NRI population in the Gulf region. Half of this Indian community comes from the state of Kerala. Funds like Sundaram, which are based in the south, may thus have an advantage in terms of investor familiarity. While 70 percent of this diaspora comprise semi-skilled and unskilled workers, 20-30 percent are professionals. It is this professional community which funds will be targeting.
They've appointed the UAE-based financial services company—Barjeel Securities—as distributors for the region. Barjeel is a joint venture between the Kochi-based Geojit Securities and the Al-Saud group.
If one looks at the thousands of crores deposited by non resident Indians in Gulf in NRE/NRO or FCNR accounts, then the potential for marketing Indian mutual funds in the region is immense. Of course, success has been limited so far and very sensibly, funds have their feet firmly on the ground.
Says T.P. Raman, Managing Director, Sundaram Mutual Fund, "Our expectations are modest. We would like to be one of the preferred investment vehicles of NRIs when it comes to making investments in India. It is too early to talk of market size expectations."
While some investments have started coming in, investors need to be mindful of the added risk of exchange rate fluctuations.