India's UTI Shariah fund to target Gulf investors

UTI International, a subsidiary of India's UTI Asset Management Company, is planning to launch another offshore Shariah-compliant fund for retail and institutional investors based in the UAE and the Gulf, a top company official said.

"We'll be launching another Shariah fund in the next three months, as we are getting tremendous interest in such investment products from retail as well as institutional investors from this region. There is huge demand for Shariah products, which needs to be tapped," Tarun Ghulati, CEO, UTI International, told Emirates Business.

"We are looking for a strategic partner and have formalised the structure," he said. UTI International is currently the only Indian fund house having an offshore Shariah fund, which is based out of Kuwait and launched with a Kuwaiti counterparty, he said.

He said the firm's asset management business continues to attract a large number of investors from the UAE and the Gulf despite the talks of slowdown.

"Our assets have grown and we have quadrupled our assets over the past year from regional investors," he said.

UTI International is responsible for all international business activities of its parent company UTI Asset Management Company, and is registered as a foreign institutional investor (FII) in India with the Indian securities market regulator [Securities and Exchange Board of India, or Sebi].

Globally, UTI International manages close to $700 million (Dh2.5 billion) of assets and the bulk of the money managed is largely institutional. "As much as 70 per cent of our global business comes from the Middle East at the moment, with institutional investors [comprising banking institutions, HNWIs, family offices, etc] consisting a large chunk of investors," he said when asked about the importance of this region in UTI International's global portfolio.

In the GCC and the wider Middle East region, UTI International markets and distributes its offshore funds for both retail as well as institutional investors looking for investment opportunities in India, while fund management is done onshore in India. However, he said the firm has plans to manage funds offshore as well if there is a demand for that.

He said UTI International's strength lies in the India growth story. "While the global market saw turmoil last year, green shoots are now visible particularly in the emerging markets. We're seeing growing preference to invest in India. A larger allocation of investments that were going into several emerging markets are now being directed to India," he said.

UTI International is currently managing almost nine offshore funds in the GCC. One of them is the India fund – a diversified equity fund incorporated in Mauritius that invests in Indian equity and equity-linked securities listed on an Indian stock exchange. The fund was launched by Merrill Lynch in 1986 and is the oldest fund in the world for anybody willing to invest in India, he said.

Additionally, there are sector funds, such as pharma fund (an equity fund incorporated in Mauritius and investing in a portfolio of equity and equity-linked securities of Indian pharmaceutical companies listed in India), IT fund (again an equity fund and investing in a portfolio of equity and equity-linked securities of Indian IT companies listed in India).

Then there are other offshore funds such as UTI Rainbow funds (Class A, Class B, Class C, and Class E).

Last year, UTI International launched a foreign currency convertible bond fund in Dubai and two other feeder funds to tap into the investors' interests to invest in India, he said. However, it is not only the non-resident Indians (NRI) based in the region who invest in its funds as retail investors, but there is a significant interest from non-Indians also. "We target different classes of NRIs but our funds are not limited to NRIs only. Because of good performance, our funds are attractive to non-Indians also," he said.

He said the firm will continue to consolidate its positions in the GCC and the Middle East, and launch more funds and expand its team. UTI International has its country offices in London, Dubai and Bahrain, while subsidiaries are in Mauritius and Singapore.

The firm is also looking at opening an additional office in Qatar towards the end of this year, as well as looking at entering the Saudi Arabian market through a strategic partnership, he said.

"We follow a well-diversified approach and we don't necessarily cherry-pick stocks," he said when asked what investment strategy the firm follows.

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