Credit rating agency Crisil launched index to measure FPI investments.
Rating agency launched an index to measure the performance of investments of foreign portfolio investors (FPI) in the fixed-income market. The Crisil FPI index would serve as the benchmark for the performance of FPI investments in government securities, and "AAA", as well as "AA", rated corporate bonds with the residual maturity greater than three years. ' The indices have significance because of rising FPI investments in fixed-income securities and progressive hikes in the limits prescribed by the Reserve Bank of India (RBI) in its medium-term framework introduced in October 2015.
Since 2011, the investment limit has shot up from Rs 436 billion to Rs 2,893 billion for G-secs, and from 1,865 billion to Rs 2,273 billion for corporate bonds," The index, which constructed based on the regulatory restrictions for FPIs and its investment trends in domestic fixed-income securities, has generated annualised returns of 9.15 percent over the past five years.
Utilisation of limit for investment by FPIs stands at 95 percent in corporate bonds and 84 percent in gilts today, Crisil said. " Indeed, at Rs 1,988 billion, the net debt investment of FPIs in 2017 was the highest since 2002, barring only 2014," it added. Apart from the FPI index, Crisil maintains 47 indices across the bond, gilt, money market, hybrid and commodity segments, which are used by asset managers for benchmarking their products and portfolios.
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