Aiming for the world, they do well but get eclipsed

Aiming for the world, they do well but get eclipsed
For those who have invested in overseas-focused mutual funds, this year may look disappointing compared with the performance of the local stock market, which gave over 26 per cent returns year-to-date.

But, data suggest most global funds have performed reasonably well, despite a troubled year for some global econ­omies, including the US, Europe and China.

According to data provided by Morning Star, a mutual fund tracker, out of a total of 29 global funds, 15 gave over 13 per cent returns this year, led by JP Morgan JF ASEAN Equity Offshore (26.21 per cent), JP Morgan JF Greater China Equity (23.75 per cent), ING Global Real Estate (20.53 per cent), Kotak Global Emerging Market (18.45 per cent), L&T Global Real Assets (17.57 per cent) and DWS Global Agribusiness Offshore (17.22 per cent).

Even ETFs tracking global markets have posted robust returns in 2012 so far. Motilal Oswal MOSt Shares Nasdaq 100 ETF gave 20.86 per cent, while Goldman Sachs Hang Seng BeES ETF posted even better returns at 25.44 per cent, the Morning Star data showed.

However, asset under management of these funds fell from Rs 2,433 crore in the June quarter to Rs 2,394 crore in the September quarter, according to data from the Association of Mutual Funds in India (Amfi). There marked a decline of Rs 158 crore from the September 2011 figure of Rs 2,552 crore.

The lacklustre performance of Brazilian (0.7 per cent) and Chinese (minus 6.1 per cent) markets has impacted the performance of some emerging market funds and Brazil-focused fund (HSBC, which returned 0.24 per cent). Even volatility in global commodity prices has taken the sheen off some funds with global commodities as theme.

Still for diversification of risks away from local markets, fund managers and experts recommend investors to park a portion of their funds in overseas markets. Nandkumar Surti, managing director & CEO of JP Morgan Asset Manag­ement, India, explained that the fund’s overweight position on Indonesia and depreciation of the rupee (about 16 per cent this year) helped its Asia focus fund to beat peers. Similarly, for its China fund, a bottom-up stock picking approach helped, as valuations were attractive on concerns in banking and real estate sectors, Surti told Financial Chornicle.

Nimesh Shah, MD & CEO of ICICI Prudential AMC, said global funds play a key role in diversification in an investor’s portfolio. “All asset classes do not chase returns, some like gold and developed world equities help stabilise a portfolio. From that perspective, global funds are at a very early stage in India,” he felt.

J Venka­te­san, an equity fund ma­n­ager at Sundaram Mutual, reckoned exposure to global funds was a must to “diversify the risk” for Indian investors.

Moreover, there is a strong possibility of global growth bottoming out, and may give better returns in 2013. Sundaram Mutual’s Global Advantage fund returned 14.17 per cent this year, impacting mostly from 41 per cent weight on Asia. Since inception, the fund returned 4.9 per cent, a similar return for Nifty during the same period.

All the MF honchos Financial Chronicle spoke to, however, expected the Indian market to perform better in 2013 on the back of reforms-push by the government and compelling valuations. zz

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