Prof. Jayanth R. Varma’s Financial Markets Blog

A blog on financial markets and their regulation

Global Diversification and Indian Mutual Funds

Ajay Shah has a detailed
analysis
of the regulations governing
international investment by Indian mutual funds. His conclusion:
“Small pieces of progress on economic policy in India seem to
take a long time.” I entirely agree. There is a need to move much
faster. Moreover the first thing that needs to be liberalized is access to
global index products. The actual regulations appear to reflect not only
the fear of a more open capital account, but also some degree of
regulatory capture. Obstacles in the path of exchange traded funds
serve to protect management fees in the fund management industry.

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