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ACPI launches first Indian fixed income UCITS fund


ACPI Investments announces the launch of the ACPI India Fixed Income UCITS Fund, the first UCITS fund to invest exclusively in Indian fixed income. The long-only fund will invest in Indian government bonds and government-backed corporate bonds. Sectors include power, finance, infrastructure and utilities.

The fund has a target return of +10% per annum, which will be derived from portfolio yield, bond and currency appreciation. Indian government and government-backed 10-year bonds are currently yielding approximately 8%, with little to no default risk. Exposure to the strong Indian Rupee is expected to appreciate over developed world currencies 3-4% a year over the medium to long term. Indian fixed income was one of the best performing emerging markets in 2008 when it posted positive returns.

The Indian bond market has been known for its inaccessibility to foreign investors.  The majority (95%) of the Indian government bond market is owned by Indian domestic investors who buy and hold for the long-term.  The market is not easily accessible to foreign investors as all participants have to be approved by the Securities and Exchange Board of India. ACPI is the first firm to be given approval by SEBI for an Indian fixed income UCITS fund. 

Steve O’Hanlon, Head of Fixed Income at ACPI and the Fund’s lead manager, says: “The reasons we like India are great demographics, a great outlook for growth and a great investor base.  India fixed income has a local, solid, long-term investor base and is the only emerging markets asset to have that.  India fixed income also has the very rare combination of a high yield and currency appreciation potential.

“I believe this is an ideal time to enter the India fixed income market before it opens up more broadly to foreign investors and when yields of 8% are still readily available.”

This new tund follows the successful launch of the Q-ACPI India Fixed Income Fund in August 2010, an offshore fund with the same investment strategy.

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