HSBC Mutual Fund has filed an application with the Securities and Exchange Board of

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India (Sebi) to launch a new fund named the Brazil Equity Fund.

The scheme is an open-ended fund-of-fund that would invest primarily in HGIF (HSBC Global Investment Fund) Brazil Equity Fund. The fund would also invest a part of its corpus in money market and liquid fund instruments to meet liquidity requirement from time to time. The fund would be benchmarked to MSCI Brazil 10/40 index.

The fund offers growth, dividend payout and dividend reinvestment options to investors. The minimum investment amount is

Rs 10,000 and the minimum redemption amount is Rs 1,000.

The emerging market theme has been popular with fund houses for the past couple of year. Around half a dozen overseas funds with emerging market theme have been launched since the start of 2008. China and Latin America remains the focus of these funds.

Recently, Benchmark Mutual Fund launched the Hang Seng ETF, India’s first international exchange-traded fund that would invest in the constituents stocks of the Hong Kong index.

Most fund experts see overseas funds as a tool of geographical diversification. However, many experts say that most emerging markets move in tandem and therefore, may not be the best option for diversification.

Dhirendra Kumar, chief executive officer, Value Research, a mutual fund tracker, told Financial Chronicle, these funds are more of opportunistic investment than risk diversification. “Most emerging and Bric country markets move in a similar direction and therefore, defeats the purpose of risk diversification. However, given the positive market sentiments in these countries, fund houses want to cash in on the opportunities available there,” he said.