Fixed Income

The Indian Fixed Income market provides rich opportunities for international investors. Up to a few years ago, India’s history had been one of fiscal deficits, inflation driven by consumption subsidies, and high current account deficits driven by wary citizens hoarding gold. Recent years have seen a sea change as monetary and fiscal authorities have taken a keener eye to attracting global investment. A few highlights:

  • India is an investment grade credit, and its inclusion in the JP Morgan Global Bond Index should give it a 10% weighting
  • Political power shifts have tended not to derail India much from a long-term Real GDP growth rate of around 6.5%, which we expect to continue
  • India’s monetary authorities have gotten inflation under control and, despite changes in leadership, the Reserve Bank of India is focused on keeping inflation contained
  • The Indian government is focused on making the country more business-friendly as evidenced by historic reforms like the Goods and Service Tax, an overhaul of the bankruptcy process, and numerous FDI-friendly measures across industries

Though undoubtedly there will be bumps in the road, ultimately all of these factors should converge and lead to lower long term costs of capital in India.

Quantum’s approach in fixed income is two-pronged:

  • Macroeconomic analysis and forecasting of a range of indicators, including:
    • GDP
    • Inflation
    • Monetary & Fiscal Policy
    • Currency
  • Microeconomic analysis involving:
    • A proprietary credit research process that considers fundamental factors as well as a qualitative management assessment to come up with forecasts
    • Market Research
    • Spreads Analysis
    • Liquidity Analysis

The result is a dynamic portfolio that adds tremendous value in a world replete with low real rates.