FII inflows to rise over key global index

Oct 04 2012, 14:10 IST
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FII inflows to rise over key global index. (Reuters) FII inflows to rise over key global index. (Reuters)
SummaryInflows into the Indian markets are set to witness a boost of over $2 billion.

FIIs (Foreign Institutional Investors ) inflows into the Indian markets are set to witness a boost of over $2 billion in 2013 as global leading investment management company, Vanguard, has announced to switch the benchmark for its 16 stock and balanced funds and six index funds including the Vanguard Emerging Market ETF from MSCI benchmarks to FTSE indices and Center for Research in Security Prices (CRSP) indices.

India stands to benefit as its weightage in the FTSE Emerging Index stands at 9.6 per cent (as on September 28) as compared to 7.01 per cent weightage in the MSCI Emerging Market Index (as on October 1) and would lead to a higher component of these funds getting parked here.

Vanguard Emerging Market Stock Index Fund, which has total assets of $67.1 billion (as on August 31) will end up investing more in India on account of the higher weightage in the FTSE Emerging index.

At 6.5 per cent, Vanguard Emerging Markets ETF would have invested $4.36 billion in India out of its total assets of $67.1 billion. However, at 9.61 per cent the investment will rise to $6.44 billion.

Experts say that this is a big bonus and there is a potential for a lot more.

“Just a small change of this sort will result into an additional inflow. I wish our government was proactive in selling India’s story with the credit rating agencies as a rating revision upwards will significantly increase the inflow in the country,” said a top official with a leading investment bank who did not wish to be named.

INDEX SHIFT

* Vanguard,a leading investment management firm will switch to the FTSE index from the MSCI benchmark

* India’s weightage in FTSE Emerging Index stands at 9.6% as against MSCI’s 7.01%

* Vanguard Emerging Markets ETF has total assets of $67.1 billion. At 9.61% weight, India would get $6.44 billion

* Market watchers other ETFs too would follow this move

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