Exchange traded funds updates
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Navi Mutual Fund, the fund unit acquired by Sachin Bansal, co-founder of massive Indian online retailer Flipkart, is set to make a Vanguard strategy available in the country through a new fund-of-funds scheme.
The Indian fund group, which was previously branded as Essel Mutual Fund, is currently seeking the regulator’s approval to roll out six funds, one of which is the Navi Total US Stock Market Fund of Fund that feeds into Vanguard’s US-listed Total Stock Market Index Fund exchange traded fund, according to regulatory filings.
The Vanguard ETF tracks the CRSP US Total Market Index, which represents 100 per cent of the investable US stock market.
As of end-July, the ETF had about $1.3tn in total net assets. It has an expense ratio of 0.03 per cent.
The US passive fund giant has said that it did not plan to enter the Indian market, which has proven a very hard nut to crack for even the largest global fund companies, with the likes of BlackRock, JPMorgan Asset Management and Fidelity all exiting the market in recent years.
Vanguard has been putting more focus in recent months on strengthening its business in mainland China in particular.
In July this year, Vanguard’s China fund advisory joint venture with Chinese tech giant Ant Group tripled its registered capital to Rmb150m ($23.1m). The Vanguard Investment Advisors joint venture, which was established in 2019, last year rolled out one of the first licensed fund advisers to begin operations in China.
As part of the changes in the group’s regional focus, Vanguard last year decided to exit from both the Hong Kong and Japan markets, and said it would transfer its Asia headquarters and relevant staff to Shanghai, the largest financial hub in mainland China.
Vanguard has also retreated from Hong Kong’s exchange traded fund and Mandatory Provident Fund pensions market.
Before that, Vanguard closed its Singapore office in 2018 and subsequently cut one-fifth of the headcount in its Hong Kong office later the same year.
Bansal entered India’s mutual fund market in 2019 via his own private equity company, BAC Acquisitions.
The new passive funds will help Bansal to fully enter the funds space, following his acquisition of Essel Mutual Fund.
Apart from the Vanguard FOF strategy, Navi MF has also filed for approval to launch a Nasdaq 100 FOF scheme that invests in other US managers, such as iShares and Lyxor, as well as four domestic index funds.
*Ignites Asia is a news service published by FT Specialist for professionals working in the asset management industry. It covers everything from new product launches to regulations and industry trends. Trials and subscriptions are available at ignitesasia.com.
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