Flemings has been working on an Indian investment trust for some months, and has found a way of combining the benefits of a Mauritian tax shelter. It will shortly begin pre-marketing to institutional investors, and hopes that share dealings in the new trust will begin in about two months.
Economic reform in India over the last three years has attracted substantial foreign investment. Other British fund managers including Foreign & Colonial and Martin Currie have already raised large offshore funds.
India has well established stock markets, with 7,000 listed companies and 15 million shareholders. Economic growth is expected to be 4 per cent this year and to reach 5 or 6 per cent in 1994/5, supporting substantial increases in corporate earnings.
Patrick Gifford, chief executive of Fleming Investment Trust Management, said the Indian trust should provide investors with excellent opportunities for growth.
He said: 'I believe that India will become one of the investment success stories of the 1990s.'
The trust will invest via Mauritius to take advantage of a treaty that greatly reduces liability to Indian taxes. David Smith, FITM's marketing director, said some institutions have said they would prefer to invest through an investment trust, whose shares they can trade on the London market, rather than an offshore fund.
However, some investment experts believe the Indian market is too expensive. Nick Knight, deputy managing director of Nomura Research International, last week warned pension fund managers that India was 'a disaster waiting to happen'.
Mr Knight said the enthusiasm of Western investors reflected the 'fashion (that) dictates that if I've not got India I'm just a nobody. The settlement problem related to the collapse of the Indian stock market that we're about to see will take at least the next six years to unravel.'
Mark Mobius, managing director of Templeton Emerging Markets Investment Trust, said this week that although some good bargains can be found, 'the actual market mechanism is in trouble. Trading is not efficient and should be computerised. The settlement system is in deep trouble.'Reuse content