By Rebecca Evans
The Commonwealth Bank (CBA) has launched a new investment vehicle — Capital India — to provide Australian investors with access to the Indian stock market.
The new fund circumvents many of the barriers that have historically blocked Australian investors from gaining access to India’s economy, according to CBA vice president structured products, premium business services, Irfan Khan.
“By investing in the performance of the Indian share market through Capital India, you can reduce some of the risks involved in making a direct investment,” he says.
Capital India achieves diversification by aligning with the performance of the S&P/CNX Nifty Index. This index tracks the 50 leading stocks on the Indian National Stock Exchange, and covers 25 sectors of the Indian economy.
The fund is open for investments until July 5 and will run for three years. Investors will need a minimum of $10,000 to join, and investments by self-managed super funds are permitted.
“Investors should be aware that although the CBA has confidence in the Indian economy, it is historically a volatile market,” Khan says.
Capital India is not capital-protected. CBA says the fund suits investors who have a positive medium term view of the Indian economy and are prepared to accept the volatility inherent with an emerging market.
The CBA has already released two (now closed) Capital funds based in China, and the latest India offering is unlikely to conclude the trilogy, as the bank is working on a number of other projects with similar structures.
