Indian mutual fund houses see a big opportunity in Islamic funds. It has emerged that many big funds had approached Parsoli Corporation.
Parsoli had several offers before it chose Taurus
MUMBAI: Indian mutual fund houses see a big opportunity in Islamic funds. It has emerged that many big funds had approached Parsoli Corporation, which chose Taurus Mutual Fund to launch the maiden Islamic fund in the country as it found the latter to be more compatible. Taurus has filed papers for launching the fund.
“Most big fund houses had approached us,” says Zafar Sareshwala, director of Parsoli Corporation, a Sebi-registered broker.
However, Sareshwala opted for Taurus MF as the fund house agreed to have an association with “Parsoli” in the mutual fund’s name Taurus Parsoli Ethical Fund.
“Other mutual fund houses were too big for us. We wanted to align with someone of our level. We didn’t want to be a junior partner. We did not want to have only an advisory role,” he said, citing the reason for declining other offers.
“We were comfortable with Taurus Mutual Fund,” Sareshwala.
Taurus MF too did not have any concerns about the word Parsoli being included in the fund name.
R K Gupta, fund manager of the maiden Shariah-compliant scheme, said, “The name Parsoli would attract a lot of Muslim investors.”
That doesn’t mean that non-Muslims wouldn’t be attracted to the fund, which is on the regulatory desk.
“There are about 150 mutual fund schemes launched abroad, mostly in Europe, with the word Islamic in it and they have a large non-Muslim clientele,” says Sareshwala. Even in India, 20% of the client base of the Parsoli Corporation’s brokerage business is non-muslims.
“Though for Muslims it is an asset class where they can invest by complying with the Shariah law, there are several others who invest for the socially responsible cause behind the Shariah-compliant stocks,” he said.
Shariah strategy avoids investing in companies providing financial services on interest like conventional banks and insurance or those involved in manufacturing, selling or offering liquors, pork. Firms involved in gambling, night club activities and pornography are also out of the list of Shariah-compliant stocks.
Such stocks in India would be about 2,000 of the nearly 5,500 listed firms. “About half of them don’t qualify as they are not liquid. There are about 360 stocks that are Shariah-compliant in BSE 500, while 70 stocks in BSE 100,” says Gupta of Taurus MF.
The Taurus Parsoli Ethical Fund, as the draft offer document states, will be a five-year closed ended fund, which will not be listed on the exchange.
The rationale behind not listing the fund on the exchange, Gupta said, is “The fund will have an exit window each quarter. We did not want to list the scheme as usually the funds trade at a discount to their net asset value, which is not in the interest of the investor. However, if Sebi insists that we list the scheme as it is a five-year closed ended scheme we may list it.”
After the Taurus Parsoli Ethical Fund, Parsoli Corporation has several other offerings in the pipeline.
“We are planning a slew of schemes like sectoral funds, mid-cap, small cap schemes, infrastructure fund and even a fund that offers a mixture of Indian and international equity,” says Sareshwala.
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