IDFC is merging its Portfolio Management Services business with the newly-acquired Standard Chartered Mutual Fund to sell MF products targeting high net worth individuals.
"At present, we have seven employees in our PMS, who serve offshore clients. Once merged, we will focus on domestic HNIs," said Naval Bir Kumar, managing director, mutual funds, IDFC Asset Management.
The company is also planning products that offer infrastructure as an asset to investors.
IDFC mutual funds is planning to sell products based on the Macquarie Model, adopted by the Australian financial services group Macquarie. According to the model, an institution initially funds a power plant to set-up their business. Once the plant starts generating income, the asset is sold to investors.
This is similar to how real estate investment trusts (Reits) sell properties that yield rents. As rental revenue from the property is distributed among investors in Reits, the income generated by the power plants will be distributed to investors in the infrastructure-based fund.
Kumar said that globally, the returns from infrastructure were stable between 12 and 20 per cent.
Currently, the country does not have enough assets to start such an infrastructure fund. However, Kumar is optimistic there will be enough assets within the next three years to accommodate a fund based on the Macquaire Model.
"Such products can give high returns in a country like India, as there is immense scope for infrastructure development," Kumar said.
However, the success of such funds will primarily depend on taxation and other laws.
The mutual fund business will also leverage the parent's core strength in the retail area.
"We will launch sectoral funds that will deal in equities of listed infrastructure companies," Kumar said.
