Tagged: International Equity

ATM :: Want to invest in companies like Google, Facebook, Coca Cola from India? Here’s how you can do

Global Fund investment options albeit limited have been around for a decade, with options to invest into US, Europe, ASEAN, country specific funds like Brazil & China and even funds investing into natural resources companies like Gold mining companies or Energy companies.

By Kaustubh Belapurkar – Morningstar India | Jul 15, 2017 11:02 AM IST | Source: Moneycontrol.com

ATM

International Funds from an Indian investor’s perspective have been a little bit of a hit and miss.

Global Fund investment options albeit limited have been around for a decade, with options to invest into US, Europe, ASEAN, country specific funds like Brazil & China and even funds investing into natural resources companies like Gold mining companies or Energy companies.

The greatest amount of investor interest has typically been in Gold mining funds and US funds. In fact in 2013, when the Indian equity markets where going through a prolonged lull phase, domestic equity funds too were witnessing stagnating growth.

At the time investors increased allocation into US Funds on the back of strong 1-year historical returns of these funds. Post that, though the story has been very different, with the start of the domestic equity market rally in 2014, domestic fund flows are reaching new highs, but Global funds are witnessing a slow trickle of redemptions.

As an effect of this global funds currently forms a minuscule proportion of investor’s portfolio at 0.28 percent from a high of 1.56 percent in Jan 2014.

AMFI

Why Invest in International funds

Investors should consider adding international funds in their portfolios from the perspective of diversifying risk in their portfolios.

Investments should be made for the long term on an overall portfolio allocation basis rather than a decision based on short term historical performance.

By adding international funds in your equity portfolio, you can potentially reduce the overall volatility in your portfolio by as much as 5-10 percent.

It is important to acknowledge that markets go through cycles and no market will be a top performing market year after year as is visible in the table below.

In addition, Indian markets display a lower correlation with developed markets like the US, thus the addition of such exposures helps reduce overall portfolio volatility.

The calendar Year Index Returns (INR)

calendar

Another factor to consider is the ability to take exposure to sectors or companies that you would ordinarily not have exposure to.

Global Companies like Amazon, Google, Facebook, Coca Cola, etc. are widely known and used brands in India, they derive a fair share of the revenues/users from countries such as ours. By investing in these funds, you can potentially gain exposure to such stocks.

Investors should certainly think about adding an international flavor to their portfolio and stay invested for the long term. You can consider investing 15-20% of your overall equity exposure into global funds.

Disclaimer: The author is Director of Fund Research at Morningstar Investment Adviser. The views and investment tips expressed by investment experts on Moneycontrol are their own and not that of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.

Source: https://goo.gl/MUx88e

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ATM :: How can one invest in global equities

SHREYASH DEVALKAR | Tue, 14 Jun 2016-06:40am | dna

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Today investors are spoiled for choice when it comes to avenues available for allocating fund and investing money. They can choose from fixed income products, domestic equities, global equities, derivative products, currencies and much more. With the freedom of options comes the responsibility of choice. Hence, it becomes important that we as informed investors study the advantage and risks associated with such asset classes and invest our money judiciously.

Great strides in technology have seriously shrunk the world, making every corner of the earth accessible to humans. Our daily lives are surrounded by evidence of the global economy. The phones we use are manufactured in Korea, our televisions are made in Japan, our cars are from different pockets of the world and our favourite Lebanese food is just a phone call away. In such an environment it is important to consider investment options beyond the domestic boundaries. Global equities are slowly emerging as a good investment option for domestic investors. The benefits of investing in global equities are myriad.

A fundamental reason to consider international investing and in particular global equities is diversification. Investment in global equities helps in spreading out the risk associated with equity investing as it entails investing in different markets which may not be highly correlated with each other. What this means for the average investor is that since all markets do not move in tandem, losses in one equity market can be offset by gains in another.

By diversifying into global equities the investor may be able to earn the same kind of returns as with a non-diversified portfolio, but with lesser risk, or be able to achieve higher returns, but with the same amount of risk.

International investments have shown an ability to improve risk-adjusted returns. The historical volatility of returns (as measured by standard deviation) for the global portfolio was almost 10% lower.

The MSCI World Index, which captures large and mid-cap companies’ across developed markets and covers approximately 85% of the free-float adjusted market capitalization in each country, the five year and ten year annualised Sharpe ratio is at 0.53 and 0.28, respectively. The corresponding numbers for the MSCI Emerging market index is at -0.15 and 0.18, respectively. In addition to diversification, global equities have the advantage of offering an investor exposure to faster growing economies and provide access to some of the world’s most successful companies.

Some of the world’s top performing markets in CY2015 were Argentina, Hungary, Denmark, Iceland and China while on the other hand the worst performing ones were Colombia, Peru and Bermuda. India’s returns figured in the bottom 50% of the returns computed for 74 of the top stock markets in the world. Quantitative easing might have pushed the European and US markets to multi year highs. However, flow of funds is likely to be directed towards countries which are showing better prospects of growth and fiscal discipline. Excluding India, markets like Taiwan, Vietnam and South Korea are expected to give good risk adjusted returns. Some funds can also be allocated to European equities.

Since the level of expertise and knowledge required in investing in global equities is quite high, the best option for an individual investor is to seek guidance from experts or fund managers of professionally managed funds.

Mutual funds offer various schemes where a portion or the entire fund may be exposed to global equities. In this case, professional fund managers study global markets and allocate the fund’s corpus to the countries where they expect good growth and returns.

The writer is fund manager with BNP Paribas

Source : http://goo.gl/7oMOxr

POW :: ICICI Prudential Indo Asia Equity Fund – a review

Nikhil Walavalkar | May 05, 2015, 05.48 PM IST | Source: Moneycontrol.com
Equity investors looking for a solution that invests in both- shares listed in Asia and India with three years time-frame, can consider this scheme as an investment

POW

As Indian equities come under pressure and foreign institutional investors start logging out of India in search of value, the schemes investing overseas appear attractive. But not many individuals can time this move from Indian equities to foreign equities. Also lack of awareness about foreign markets is another challenge for many. Hence it makes sense to go with a scheme that offers to invest in Indian shares as well as shares listed overseas. If such a scheme comes with a good track record, it is a good investment pick. ICICI Prudential Indo Asia Equity Fund (IPIA) fits the bill and can be looked at as a core portfolio holding with a minimum three years view – longer the better.

The scheme
IPIA was launched in October 2007. As on March 31, it has an asset size of Rs 151 crore. The scheme is benchmarked against 65% CNX Nifty + 35% MSCI Asia ex-Japan Index. Sankaran Naren, Atul Patel and Shalya Shah are the fund managers of this scheme.

Asset allocation
The fund intends to invest 65% to 95% of the money in shares listed in India. Up to 35% money can be invested in Asia Equity Fund.

Portfolio composition
IPIA sticks to fund route when it comes to taking ‘Asia’ exposure. As of March 31, 25% money was invested in Eastspring Inv Asian Equity Fund. Remaining money is invested in Indian shares along with 2.7% exposure to short term debt and other current assets. Banking and finance, services and automobiles are the top three sectors with 26.18%, 10.24% and 9.08% respectively. These three sectors account for 45.5% of the scheme. There are 21 stocks in Indian stock portfolio. Hence the portfolio can be termed as concentrated portfolio if compared with other portfolios of the fund house and the industry average.

Investment strategy
Fund managers have built a portfolio that offers exposure to companies of varying sizes. Though this is a concentrated portfolio, sector diversification and focus on quality ensures that investors are not taking undue risks. The fund managers avoid taking exposure to companies that come with highly leveraged balance sheets. Fund managers believe in continuing their Asia exposure as long as they find it attractive.

Performance of the scheme
Over three and five year time period IPIA has given 26.6% and 17.7% returns respectively. The fund has beaten the category average for international funds and Nifty by a good margin. Do refer table for better understanding of the performance numbers.

ICICI Pru Indo Asia Fund

Source: Moneycontrol.com / All numbers are annualized.

Returns (%)
The scheme did well compared to peers.

ICICI Pru Indo Asia Fund

Source: Moneycontrol.com /All numbers are annualized.

Scheme has done well across time periods. IPIA also managed to contain downside in bad times like CY2011, when it lost 15.05% as compared to 24.62% loss in Nifty. The scheme is not solely dependent on Indian markets. This diversification has helped the fund post better risk-adjusted returns in the long term.

Risks
As this scheme invests in shares, it must be seen as a high risk investment. Exposure to mid-sized and small sized companies may cause some intermittent volatility due to concentrated bets the fund managers have taken. Sudden fall in stock markets across Asia can lead to loss of capital in this scheme. Also the scheme can underperform broader Indian equity markets in case of euphoric up-move in very short time period.

Should you invest?
For investors keen to take a three year view on Indian equities and looking for some amount of diversification beyond Indian equities, this can be a good investment vehicle. IPIA is treated like an equity fund for the tax purpose as it invests minimum 65% of money in Indian equities. If you hold on to the investments in this scheme for more than one year, capital gains earned on this scheme are tax exempt. It is better to invest through systematic investment plan to benefit from stock market volatility.

Source : http://goo.gl/pw3cfj