Lotus MF sees AUM trebling to $2 bn

SINGAPORE: Lotus India Asset Management expects funds under management to nearly treble to $2 billion in the next 10 months as it targets Indian retail investors, an executive said on Thursday.

Lotus, a joint venture between Fullerton Fund Management and London-based Sabre Capital Worldwide, has launched seven mutual funds, raising $700 million, since November 2006. The fund house also plans to launch 10 to 12 more funds.

“India is a very underserved, very underpenetrated market for mutual funds,” Ajay Bagga, chief executive, said in an interview during a visit to Singapore.

“Out of every $100 that the Indian household saves, about $46 goes into bank fixed deposits, about $9 is held in cash,” while barely 4% goes into stocks or bonds, Bagga said. The remainder is divided equally between provident funds, insurance and post office savings, he said.

By comparison, in a more developed market like the US, Bagga estimated that 14-16% of retail money goes into the capital markets. Indian mutual funds had total assets of Rs 3.5 lakh crore ($86 billion) in April, up 36% from a year earlier, according to data from the Association of Mutual Funds in India (Amfi). Bagga said growth was likely to come from retail investors, thanks to higher savings, and from the pension industry as the government opens up the sector to fund managers.

Most of the money currently managed by Lotus comes from financial institutions, companies and small businesses.