Forsyth Partners, a UK-based $1.3 billion fund-of-funds firm, will double its India allocation over the coming two months to $150 million, the 15-year-old firm's chief said on Wednesday.
The company, which provides investment and research services to a large number of private banks and pension houses across the world, said inflows in its India fund are likely to reach $150 million on the back of increased interest among its clients.
The company, which started out as a research house for global markets, had recently launched a fund dedicated exclusively to investments in Indian on-shore mutual funds and is one of the few foreign investors who invest mainly in Indian funds.
"We currently have around $70 million invested in Indian stocks through mutual funds and our funds have appreciated nearly 25 per cent in value since it was launched in October 2005," said Paul Forsyth, who started the firm in 1991.
"But not all the money promised could be raised at the time, but now that many of the roll-out procedures are nearing completion, funds promised by some of our institutional clients will materialise over the next two months," he added.
Forsyth caters to around 600 institutional clients around the world and invests only in mutual funds. The company has funds-of-funds dedicated to emerging markets, commodities, real-estate and even geographic locations such as North America.
"We are not big on country-specific funds and, in fact, India is the only country except Japan for which we have launched an exclusive fund," Forsyth said. "It was our clients who clamoured to have an India-specific fund and that faith has now paid off," he added.
Forsyth, who once managed Fidelity Investments, said smaller clients and those which have a very minuscule percentage of their total investments in India, prefer to invest indirectly in the country through mutual funds dedicated to India.
He, however, said his approach of piggy-backing on the expertise of fund-managers based in India has paid richer dividends than typical off-shore funds.
"In terms of returns, even the best off-shore funds for India fail to give the returns provided by an average mutual fund here. According to our experience, when you eat, live and sleep here, the insight into the Indian companies is very different compared to someone sitting in New York or London," he pointed out.
Forsyth also expects the markets to track the earnings growth of the companies in 2006. "It certainly is not going to be as easy as the last three years, from here on, we will have to go back to the basics and be careful about which stocks to invest in," he said.
