There has been a rush of international funds lately but due to a number of reasons, they are yet to catch investors fancy
Mumbai: With India being a laggard compared to many other markets, international fund of funds providing a slice of overseas markets are in the limelight. While their returns were nothing to write home about till last year, there has been a sudden improvement in their performance this year.
These funds have posted an average of 18 per cent annualized returns over a one year period. AIG Gold Fund has topped the chart with 44 per cent annualized return followed by DSPBR World Gold Fund with 32 per cent annualized return. On the other hand, equity diversified funds have posted an average of 10 per cent return over a four year period.
Currently there are 17 international funds managing Rs 2,681 crore in the Rs 7 lakh crore mutual fund industry. Recently, Mirae Asset MF launched a China Advantage Fund focused on the consumption theme.
On Mar 28, 2011, Franklin Templeton MF filed an offer document with SEBI to launch its Franklin US Opportunities Fund which will be benchmarked against Russell 3000 Growth Index. Earlier this month, Franklin had filed an offer document to launch a feeder fund which will invest in Templeton Asian Growth Fund which has exposure to the Asian markets like Hong Kong, Korea, Malaysia, Singapore and Thailand.
Deutsche Mutual Fund, Fidelity and J P Morgan launched their offshore funds last year.
Apart from launching JP Morgan Emerging Europe, Middle East & Africa Equity Off-shore Fund in October 2010, it plans to launch a JPMorgan Global Natural Resources Equity Off-shore Fund and JP Morgan JF Asean Equity Off-shore Fund.
In the ETF space, Motilal Oswal launched India’s first ETF providing exposure to Nasdaq index called NASDAQ 100 ETF. ETF specialist Benchmark MF listed its Hang Seng BeES tracks HangSeng Index on March 1, 2010. As of now this fund is managing Rs. 61 crore.
While there has been a rush from fund houses to launch international funds, financial planners are not very keen to include such schemes in their investor’s portfolio. Such funds are purely perceived as diversifiers for investors wanting to get overseas exposure. Moreover the currency risks also play a spoilsport. The rupee has appreciated from Rs 45.18 in March 01 to Rs 44.78 as on March 29, 2011 due to buoyant FII inflows.
“We have not been able to predict rupee dollar movement. Eventually, the returns have to be seen in rupees. If rupee goes up, then your returns get diminished. As of now it’s a wait and watch situation for us to figure out a direction. If Indian equities post a 15 per cent return over the next five years, then it is advisable to stay away from markets which you don’t understand,” says Sumeet Vaid, Founder/MD, Freedom Financial Planners.
Fund experts advise that investors should not have more than 10 per cent asset allocation in such funds. Retail investors have kept away from such funds due to limited awareness about these schemes.
“These funds offer you asset allocation. Investors should ideally have up to 10 per cent corpus in international funds. There could be instances when overseas funds do well which is what is happening right now. Such funds will catch up with retail investors going ahead. Right now retail investors may not be keen on such funds but it’s the HNIs who will be investing in such funds. It is a little bit difficult to market such funds compared to conventional NFOs because it requires some awareness. It will take some time for these funds to become popular,” says Vikaas Sachdeva, CEO, Edelweiss Mutual Fund.
|
Scheme Name |
NFO Open Date |
Total AUM (Cr.) |
1 Years Annualised |
3 Years |
Since Inception |
|
AIG World Gold(G) |
15-Apr-08 |
127 |
44.2 |
NA |
17.18 |
|
DSPBR World Energy-Reg(G) |
10-Jul-09 |
199 |
27.03 |
NA |
14.95 |
|
DSPBR World Gold-Reg(G) |
25-Jul-07 |
810 |
32.38 |
8.55 |
18.74 |
|
DSPBR World Mining-Reg(G) |
23-Nov-09 |
134 |
19.82 |
NA |
16.3 |
|
DWS Global Agribusiness Offshore(G) |
6-Apr-10 |
20 |
|
NA |
23.8 |
|
DWS Global Thematic Offshore(G) |
31-Jul-07 |
19 |
10.8 |
-1.52 |
-3.8 |
|
Fidelity Global Real Assets Fund (G) |
11-Jan-10 |
28 |
21 |
NA |
27.98 |
|
HSBC Emerging Mkts(G) |
28-Jan-08 |
45 |
12.18 |
1.25 |
1.4 |
|
ING Global Real Estate-Reg(G) |
20-Nov-07 |
55 |
9.98 |
-0.13 |
0.43 |
|
ING Latin America Equity(G) |
19-Jun-08 |
27 |
8.61 |
NA |
4.93 |
|
ING Optimix Global Comm
|
