Fund houses are queuing up to launch overseas funds as a depreciation in the rupee and the outperformance of some overseas markets makes these funds attractive.
According to market observers, local investors who had little exposure to overseas funds until a few years ago are now looking at investing in these markets amid an uncertain market environment back home. ?Investors are keen on diversifying their portfolio. That together, the rupee’s depreciation and the fundamental attractiveness of some overseas markets are helping the cause of overseas funds,? said Saurabh Nanavati, CEO, Religare MF.
Religare has filed an offer document with Sebi in October for launching three overseas funds Religare Invesco Pan European Equity Fund, Religare Invesco Global Equity Income Fund and Religare Invesco US Value Equity Fund. Other funds that have recently filed an offer document with Sebi for launching an overseas fund include JP Morgan MF (JPMorgan Europe Dynamic Equity Offshore Fund), Reliance MF (Reliance Japan Equity Fund), Kotak MF (Kotak US Equity Fund). PineBridge Investments on Wednesday launched PineBridge India-US Equity Fund.
?It makes business sense for fund houses to launch these products as quite a few overseas markets are doing well,? said Vicky Mehta, senior research analyst, Morningstar India. ?Also, global funds are relatively new in India and will help expand the mutual fund pie.?
In the year to date, US indices have gained between 22% and 34%, with the benchmark S&P 500 index up 27%. The major European indices have gained 13%-27%, while Japan’s Nikkei 225 rose 28% in dollar terms. In contrast, our benchmark BSE Sensex has fallen 7% in dollar terms during this period.
The US dollar has strengthened against most emerging market currencies in the past few months, including the rupee, which has depreciated 11% against the greenback since May 22. The rupee had closed at an all-time low of 68.825 versus the dollar on August 28.
FT India Feeder Franklin US Opportunities has emerged the top US fund over a one year, with returns of 52.7%. DSPBR US Flexible Equity (43.2%), DWS Global Thematic Offshore (35.6%), JP Morgan Greater China Equity Offshore (31%) and DSPBR World Energy Reg (27.6%) were other top performers.
