Rating agency Crisil on Tuesday 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 benchmark for performance of FPI investments in government securities, and ‘AAA’ as well as ‘AA’ rated corporate bonds with 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,” Crisil Research senior director Jiju Vidyadharan said in a statement.
“Since 2011, the investment limit has shot up from ₹436 billion to ₹2,893 billon for G-secs, and from ₹1,865 billion to ₹2,273 billion for corporate bonds,” Vidyadharan added.
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 per cent over the past five years.
Utilisation of limit for investment by FPIs stands at 95 per cent in corporate bonds and 84 per cent in gilts today, Crisil said.
“Indeed, at ₹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.