AMCs are planning to bring new flavors of international funds to India. In the recent past, many AMCs have launched funds which invest in US markets. Now, fund houses plan to launch funds which invest exclusively in European markets.
J P Morgan AMC has sought SEBI approval for its Europe Dynamic Equity Offshore Fund. This fund will invest in J P Morgan Funds – Europe Dynamic Fund which invests in an aggressively managed portfolio of European companies. This fund is benchmarked against MSCI Europe Index (Total Return Net), which tracks 16 developed market country indices in Europe.
According to its offer document, JPMorgan Funds - Europe Dynamic Fund has delivered 15.71% return over a ten year period. Some of its top holdings as on July 31, 2013 were AXA, Aegon, EADS, Sanofi, Societe Generale, Merck KGaA, Deutsche Post and Allianz.
The scheme is suitable for experienced investors with a five year investment horizon.
“GDP growth in the core Europe is looking better and the current valuations are also attractive. The liquidity situation is also improving. The core European countries are turning around but the peripheral regions are still facing some challenges. European companies earn 18% of their revenues from North America and 33% from emerging markets. If these markets do well, then European markets will also do well. Prior to 2008, if one developed market did well then other markets also did well. However post 2008, all markets are not moving in tandem. If investors have invested in one specific market and if it doesn’t perform well then the asset allocation goes wrong. So it has become extremely important to diversify. We are launching international funds so that domestic investors have at least 15 % to 25% of their investible assets in these funds over a period of time,” said Nandkumar Surti, MD & CEO, J P Morgan Mutual Fund.
Similarly, Religare Invesco has filed offer document with SEBI to launch a Pan European Equity Fund. Its underlying fund, Invesco Pan European Equity Fund invests in equities of European companies with an emphasis on larger companies. Launched in January, 1991, the fund is benchmarked against MSCI Europe-ND. It has no inherent style bias favoring particular sectors, stocks or market caps. Its top holdings were Novartis, Roche, BAE Systems and Schroders among others. This fund too is suited for investors who are looking for capital appreciation over five to ten year time horizon.
Franklin Templeton is also reported to be planning the launch of a similar fund.
Dhirendra Kumar, Founder & CEO, Value Research feels that the performance of these funds would entirely depend on the investment strategy of the fund. “Europe is not a homogenous market unlike US. US has many leaders and innovators which is not the case with Europe. Some or the other market does well at one point of time so the performance would depend on the funds strategy. AMCs are launching more international funds because they want to provide a variety of investment options to investors,” said Dhirendra.
International funds currently manage Rs. 2370 crore. It remains to be seen if Europe based funds will also catch investors fancy the way US funds did recently.
