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The craze for India’s booming bond market has reached as far as South Korea, where a bond fund that’s been mostly dormant for a decade is suddenly getting lots of interest.

Mirae Asset Management Co.’s fund dedicated to Indian debt has grown to about 32 billion won ($22.5 million) from 24 billion won at the end of last year, thanks to the first net inflow in about three years, according to Kim Jin Ha, head of the global fixed income division at South Korean money manager.

“The public is growing more interested in India, unlike the past when only a few institutional investors showed interest,” he said in an interview. Kim said he’s met eight securities firms and banks dealing with local retails investor this year with inquiries about India’s bond market, compared with virtually none in 2023.

India and US stocks have been in the spotlight, with the rally to records playing out in the backdrop of a still-nascent recovery in Chinese equities. Even Japan’s retail investors, who have traditionally been inclined toward the US, are showing interest in the South Asian nation that boasts the fastest growth rate among the major economies.

“The hottest topic is certainly the US these days, but outside of US assets, India is gaining attention as an alternative to China,” said Cho Jae Sung, general manager of Shinhan Bank’s Seoyeouido branch in Seoul. The interest is mainly from those who prefer funds and are looking for better returns, Cho said.

The shift comes as China grapples with ongoing economic challenges, while India’s sovereign bonds are set to be added to JPMorgan Chase & Co.’s global debt indexes from June.

The inclusion is expected to lure up to $30 billion of inflows, which exceeds the size of Indian sovereign bonds currently held by foreigners, Kim said, adding that the appeal of investing in India is also due to its stable currency.

The rupee is Asia’s top performer this year, up 0.4% versus the dollar with the lowest volatility among emerging market currencies, according to data compiled by Bloomberg. The South Korean won has weakened 3.2% in the same period, after gaining 4.8% in the fourth quarter.

Kim, who has been managing the India fund since 2013, said he prefers investing in rupee bonds issued by supranational organizations. The securities make up 40% of the fund, with the rest allocated to debt issued by the nation’s state companies, the country’s treasuries and currency, he said.

He plans to increase the fund’s current duration of 2.7% considering the prospect of the Federal Reserve cutting rates later this year.

The fund has returned 9.3% through the past 12 months as of Monday, and almost 6% annually over the past five years, data compiled by Bloomberg show.

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