Fund houses seem to getting bullish on the US economy as is evident by the rush of US focused funds in the recent past. Increasing optimism about US economy coupled with Federal Reserve’s easy monetary policy has fuelled the US stock market. The US markets rose to record highs yesterday with the Dow Jones Industrial Average and S&P gaining 0.82% and 1.01% respectively. The Dow Jones Industrial Average has gained 16% YTD while Nasdaq Composite Index has shot up 15% YTD.
Last year, three fund houses like DSP Black Rock, ICICI Prudential and Franklin Templeton launched US focused funds. However, the response from investors at that time was not so enthusiastic. DSPBR US Flexible Equity collected Rs 26 crore, ICICI Prudential US Bluechip Equity Fund mopped around Rs 55 crore and Franklin Templeton’s FT India Feeder Franklin US Opportunities Fund collected Rs 104 crore from its NFO. But the sudden optimism stemming from the US economy seems to have brought this product category back in the limelight.
Now, JP Morgan has filed offer document with SEBI to launch its JP Morgan US Value Equity Offshore Fund. Similarly, PineBridge has approached SEBI to launch its PineBride US Equity Fund. Reliance too plans to launch its Reliance US Equity Opportunity Fund.
Funds like DSPBR US Flexible Equity Fund, FT India Feeder Franklin US Opportunities Fund, ICICI Pru US Bluechip Equity Fund have delivered absolute returns in the range of 17% to 24% since their launch. Launched in March 2011, MOSt Shares NASDAQ 100 ETF is up 16% over a one year period and has delivered 23% since its launch.
Pankaj Sharma, EVP, Head of Business Development & Risk Management, DSP BlackRock Investment Managers says that while there are still a lot of uncertainties with the global economic scenario, the US economy is looking in much better shape than it was a few years ago. “The economy is showing steady signs of improvement across various parameters. In recognition of this, US stocks are up in the neighborhood of 15% so far this year. US companies have shown a good earnings growth trend and their balance sheets have also improved considerably. Given the recent rally in US equities, there could be an increase in short-term volatility which investors should be mindful of. However, investors with a long-term investment horizon looking to diversify their portfolio should stand to benefit from an allocation to US equities” said Pankaj Sharma.
Advisors too seem to be bullish on the US economy. “I think it is a good time to park 25% of your equity allocation in US funds. The 10 year yield is so low. The PE expansion could be in the range of 15 % to 20%. The EPS is growing faster than estimates. There is a lot of headroom left in the US markets. Investors can consider investing lump sum in a diversified US fund,” said Vinod Jain of Jain Investment Planner.
Most of these funds invest in their master funds domiciled in Luxembourg.
