Swiss bank converts all India funds to QFIs

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Pictet & Cie, a Swiss private bank, has converted all its India funds, so far under the foreign institutional investor (FII) segment, to qualified foreign investor (QFI) status, hoping to capitalise on easier access and lower costs.

Picet & Cie has four emerging market funds which invest in India and some segregated global emerging market (GEM) accounts. All the funds now have QFI status, according to Frank Renggli, its head of group corporate communications.

By doing so, it may have set a trend for other FIIs to follow.

The four Pictet funds are the ‘Indian Equities Fund’ with assets under management (AUM) of $271 million, the ‘Emerging Markets Fund’ with a $529 million corpus (4.7 per cent of which is invested in India), the ‘Asian Equities ex-Japan’ with AUM of $266 million (of which 7.1 per cent is invested in India) and the ‘Total Return – Banyan Fund’ with AUM of $185 million (of which 27.2 per cent is invested in India).

There is also the ‘Pictet Emerging Markets High Dividend Fund’ with AUM of $32.8 million, which can also invest in India but has not done so.

Pictet & Cie has offices in Singapore and Hong Kong to serve its wealthy Asian clients. But it has no intention to open an office in India, according to Renggli.

Last year, France’s Societe Generale the exited private banking business in India, and Bank of America-Merrill Lynch’s wealth management business outside the US, was acquired by Julius Baer.

Reports also suggest Morgan Stanley too is reviewing options for its private wealth management business in India, indicating perhaps squeezed margins in the wealth business in India.

For offshore investors, the QFI route, which allows foreign individuals and family offices to invest directly in Indian stocks, provides easy access to Indian markets. “We do expect several FIIs or their sub-accounts to convert themselves into QFIs for easier access,” said an official in a qualified depository participant (QDP). QDPs help QFIs to enter the country.

According to a note prepared by Orbis, a QDP, FIIs have to pay $5,000 and sub-accounts $1,000 for the first three years as Sebi fee and renewable every three years. The FII fee for sub-account is $10,000 per annum and the fund administrator fee is about $10,000-15,000 per annum. In contrast, QFIs need to pay only for their transactions and there is no fixed cost to be paid to Sebi.

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