Most funds linked to JP Morgan Index actively managed, could attract foreign inflows soon
funds linked to the JP Morgan emerging market bond index that now features India are actively managed, implying the impact of overseas flows could be felt as early as December when global investors decide fresh allocations for the next calendar year.
In recent conversations with market participants, JP Morgan's index managers have said that around 75% of the assets under management (AUM) linked to the bond indices are 'active', and that the total AUM tracking the platforms could be more than $300 billion, sources aware of the matter told ET.
«With active funds being 75% of more than the $300 billion-AUM tracking the JP Morgan index, pre-positioning could start from December 2023 to March 2024 itself as long as foreign portfolio investors (FPIs) are registered here.
The JP Morgan index managers said that they (FPIs) are mostly registered here,» a source said.
In an active fund, the managers of the fund are free to decide their investment plans within the index as against a passively managed fund that 'tracks' an index and hence represents stickier flows. From a broader perspective, domestic fiscal developments or the global view on emerging markets could be factors that lead to churn in actively managed fund allocations.
The JP Morgan index managers expressed optimism about the prevailing settlement process through tax certificates while acknowledging significant improvements in the turnaround time for FPI registrations.
«These were the reasons the FPIs gave positive feedback to the index committee about India's inclusion this time after years of waiting and watching.
