ABN Amro plans fund with Chindia flavour

Chindia, the new-age word coined to denote China and India, has breached diplomatic circles to enter the realm of funds, courtesy ABN Amro Mutual Fund, which has planned an equity product aimed at investing in Indian, Chinese and other global markets.

The proposed ABN Amro Chindia Fund, which will invest a minimum 65 per cent of its assets abroad, will aim at generating returns primarily from an actively managed portfolio of transferable equities of companies that are domiciled in, or derive the predominant part of their revenues or profits from, China and India.

The fund will identify companies that may benefit from the anticipated long-term growth of the two Asian giants, the offer document filed with SEBI has indicated, adding that direct investments in Chinese and Indian companies may involve specific risks.

As for investments in Chinese and Indian securities, a few beliefs hold good, it is mentioned. Both economies are growing rapidly, driven by structural change and reforms. Their consumption growth is led by positive demographics. Incidentally, Chindia's GDP growth has been twice the global rate over the past 20 years.

ABN Amro Mutual's latest move is in line with the current trend displayed by the asset management industry: funds with marked international exposure. In recent days, two offer documents have been filed - Franklin Asian Equity Fund and Birla Sun Life International Equity Fund.

SEBI notice on ADRs/GDRs


It may be mentioned here that SEBI today issued a circular related to investment in ADRs, GDRs and foreign securities as well as overseas ETFs by fund houses. This may be seen in the context of enhancement in overseas investment limits by RBI - funds can now invest within an overall cap of $4 billion. There will be a sub-ceiling for individual funds, not exceeding 10 per cent of their net assets as on March 31 of each year and subject to a maximum of $200 million per mutual fund.