With the launch of DSP BlackRock Global Allocation, Religare Invesco Global Equity Income Fund and JP Morgan Emerging Markets Opportunities Equity Offshore Fund, it seems that fund houses are now trying to provide a broader geographical diversification through funds which have mandate to invest in different countries.
Six more fund houses –Sundaram, Canara Robeco, DWS, Mirae, IIFL and DSP BlackRock have filed draft offer documents with SEBI to provide a global taste to investors.
Mirae Asset Mutual Fund has filed an offer document for its Mirae Asset Global Great Consumer Fund. The fund will invest in Mirae Asset Global Discovery Fund (underlying fund) which invests in emerging and developed markets.
Similarly, IIFL Mutual Fund plans to launch IIFL Global Equity Fund. Its underlying fund will be Wellington MP Global Opportunities Equity Portfolio which invests in companies operating in North America, Europe, Asia Pacific and UK. The fund will be benchmarked against MSCI All Country World Index.
DSP BlackRock too is planning to bring one of its largest funds - BlackRock Global Funds – World Healthscience Fund (BDF-WHF) to India. As the name suggests, the fund will invest globally in equity securities of companies whose predominant economic activity is healthcare, pharmaceuticals, medical technology and supplies and the development of biotechnology. This fund has an exposure to US, emerging and developed Europe, Japan, Asia Pacific and Middle East.
Similarly, Canara Robeco Global Consumer Trends will invest in countries like China, Germany, Hong Kong, Italy, Japan, Mexico, Netherland, Korea, Spain, Taiwan, United Kingdom, USA through its underlying fund Robeco Global Consumer Trends Fund, while DWS Global Top Dividend Fund will invest in countries like USA, Britain, Canada, Germany, Switzerland, Netherlands, France by investing in a diversified portfolio of units of overseas mutual funds that focus on high dividend yield companies.
Sundaram World Brand Fund will invest in recognized overseas stock exchanges across the world. This is a closed end international fund.
Making out a case for international funds, Sunil Subramanian, Deputy CEO, Sundaram MF asserted that the global economy is on the recovery path. “The prospect of world economy is good. Hence, fund houses are looking to tap this opportunity. Investors should diversify their portfolio by investing in other countries,” said Sunil.
Ajit Menon, EVP, Head of Sales and Co-head, Marketing, DSP BlackRock Mutual Fund highlighted the diversification aspect. “International funds are meant to provide diversification to portfolio. Hence, advisors should recommend putting a small portion of investible corpus in such funds.”
Hemant Rustagi of Wiseinvest Advisors feels that each market is different. “Global focused international funds can be a part of portfolio if investors have already diversified their investments in the Indian market. Currently, the prospect of Indian market looks better than other economies. Secondly, these funds are comparatively less risky than country specific or region specific funds. However, investors should keep in mind currency risk and taxation before taking a call.”
“Diversification is a very important factor for investing in global funds. However, we believe that other than this, an investment in a global fund will also help investors avoid concentration risk. Global funds should be recommended only to moderately aggressive and aggressive investors who have the risk appetite to deal with the volatility associated with these funds,” said Renu Pothen, Research Head, iFAST Financial India.
It remains to be seen whether these funds live up to their expectations.
