US-based State Street Investment Management, which has $5 trillion in assets under management and is among the big three index fund managers along with BlackRock and Vanguard, is planning its first India market foray through a joint venture in GIFT city under International Financial Services Centres Authority (IFSCA), according to a person aware of the discussion“The announcement is expected in 1-2 months,” the person said.
State Street did not respond to queries from Financial Express.
Experts noted the country’s passive funds industry has started to evolve with the launch of various smart beta products. Sonam Srivastava, founder of Wright Research said the Indian asset management space is looking very interesting after the recent growth seen in their financials, as the country grows this space will become more attractive.
According to her, while India business can only contribute to giants like State Street and Blackrock which have assets worth $5 trillion and $13.5 trillion respectively, these partnerships will attract more global talent as they build their India expertise.
In May, State Street Global Advisors had announced a strategic relationship with India’s smallcase which provides investment products and platforms to the Indian capital markets industry. The Indian platform had entered the asset management space in 2023 to develop index funds & ETFs as a passive-only fund house.
ETFs by being featured on smallcase’s platform technology to broaden access for Indian investors seeking global investment exposures. SSGA will provide strategic support as smallcase plans for global expansion and explore ways in which State Street Corporation’s global wealth services can further that growth.
Pankaj Shrestha, head of investment advisory division at Prabhudas Lilladher noted that most global funds have sold off their India stakes due to the standalone guidelines and the fact that India is a small pie for them. However, the gradual growth in industry assets under management cannot be ignored, he said and added after Zerodha, Jio Blackrock is also using a digital model which has shown that a direct market is also there.
Recent data shows that the top five mutual funds make for 56% of the net assets under management of the industry. Most of these are subsidiaries of large banks except Nippon Life Insurance Company subsidiary Nippon India Mutual Fund that manages Rs 6.6 lakh crore assets.
Last month, a Bloomberg report said that Jefferies Financial Group Inc. is also gearing up to enter India’s $900 billion asset-management industry, citing people familiar with the matter.