GEMGAZE
April 2014

 

For the average Indian investor, international avenues are still a relatively unexplored territory. Despite the fact that the easing of overseas investment norms for mutual funds made it possible for the retail investor in India to participate in international markets and add a foreign flavour to the portfolio, the risky nature of this investment, high volatility, and tax liability have definitely applied brakes on the growth of global funds. If you are patient enough to wait and watch your investment grow and willing to take risks in order to earn higher returns then this investment is right for you. However, do watch the charges and take care to ensure you choose a fund with a good track record.

GEMGAZE enables you to do exactly this. The five sparkling GEMs among the global equity funds in India in 2013 have retained their preeminent status in 2014 also.

Principal Global Opportunities Fund Gem

Principal Global Opportunities Fund is an open-ended balanced fund of fund launched by Principal Financial Group (Mauritius) Limited. The fund is managed by Principal PNB Asset Management Company Private Limited. It invests in funds which invest in the public equity and fixed income markets across the globe. Launched in March 2004, Principal Global Opportunities Fund is the oldest global fund in India. With an AUM of Rs 25 crores, Principal Global Opportunities Fund has earned a one-year, three-year, and five-year returns of 3.48%, 4.83%, and 14.30% respectively. Being a feeder fund, the performance of the fund depends entirely on Principal Global Investors – Emerging Market Equity. 96% of the portfolio is in equity, predominantly mid and small cap stocks. The fund is benchmarked against the MSCI World Index. The expense ratio is 1.29% and the portfolio turnover ratio is 10%. The fund has been managed by Mr. Rajat Jain since inception.

 

Templeton India Equity Income Fund Gem

 

With an AUM of Rs 897 crores, the one-year return of the Templeton India Equity Income Fund is 16.73% as against the category average of 23.29%. With about 30-35% exposure to international stocks, this fund delivered 11.5% annually in the last three years, comfortably beating its benchmark BSE 200’s return of 5.1%. The fund also finds a place in the top quartile of three and five-year performance chart of diversified equity funds. The fund will hold only up to a third of its assets in international stocks. Hence, with at least 65% holding in Indian equities, it will qualify for capital gains tax benefits available to equity funds. As the fund holds a number of dividend yield stocks as part of its value approach, it also regularly distributes dividends. Since, its inception the fund has, without fail, paid out dividends once or twice a year. The fund boasts of an offbeat portfolio with stocks from semiconductor industries to transportation – sectors that do not find much place in the Indian listed universe. Semiconductor stocks such as United Microelectronics Corporation (Taiwan) as well as shipping plays such as Cosco Pacific are part of the fund’s portfolio. True to its value style, the fund has typical high dividend yield sectors such as finance, oil and chemicals. Even in the dividend yielding FMCG space, it holds less expensive stocks from countries like Taiwan and Chile. As a value fund, the fund would have to scout outside India for value. India has on most occasions traded at a premium to many Asian, emerging nations. The fund is managed by renowned fund manager Dr. J Mark Mobius and assisted by Chetan Sehgal and Vikas Chiranewal. The expense ratio of the fund is 2.45% and the portfolio turnover ratio is 10%.

 

DWS Global Thematic Offshore Fund Gem

Deutsche Mutual Fund changed the name of DWS Invest Global Thematic Offshore Fund to DWS Top Euroland Offshore Fund. The underlying fund has been changed to DWS Invest Top Euroland, a Germany-based fund. The feeder fund was earlier investing in DWS Invest Global Thematic Fund based in the US. The fund's benchmark has been changed from MSCI World Index to EURO STOXX 50. The India-based fund will allocate 95-100% of its assets to units of overseas fund. Its allocation to debt instruments in the domestic money market will stay between 0 and 5%. With an AUM of a mere Rs 59 crores, DWS Global Thematic Offshore Fund has earned a one-year, three-year, and five-year returns of 25.55%, 14.41%, and 15.67% respectively. The expense ratio of the fund is 1.85% and the portfolio turnover ratio is 37%.

 

Sundaram Global Advantage Fund Gem

Sundaram Global Advantage Fund was launched in July 2007. The fund has an AUM of Rs 40 crores. Sundaram Global Advantage Fund has earned a one-year, three-year, and five-year returns of 7.22%, 6.46%, and 15.48% respectively.  The fund has invested in 10 foreign equity mutual funds, with Fidelity South East Asia and DB Tracker Emerging Markets Asia being the top two funds. 86% of the fund’s assets are in equities with the rest in cash. The fund is benchmarked against the MSCI Emerging Markets Index. The fund managers are Mr. J. Venkatesan since January 2008 and Mr. S. Bharath since November 2009. The expense ratio of the fund is 1.4%.

 

ICICI Prudential Indo Asia Equity Fund Gem

ICICI Prudential Indo Asia Equity Fund was launched in September 2007. The fund has an AUM of Rs 126 crores. Its one-year return is 25.85% as against the category average return of 21.34%. ICICI Prudential Indo Asia Equity Fund, an open-ended diversified equity fund offers a balanced portfolio of investment opportunities in India as well as Asia ex-Japan, where the offshore allocation is aimed at improving the return and risk characteristics of the portfolio over a longer term. This fund invests 65-100% in Indian equity & 0-35% in IOF Asian Equity Fund; a diversified fund managed by Prudential Asset Management, Singapore. The Indian component is managed as a flexi-cap fund and seeks to benefit from diversification across developed and emerging economies across Asia (ex-Japan). The fund has access to global leaders not otherwise available e.g. Industrial and Commercial Bank of China (China), Samsung Electronics (Korea), Taiwan Semi-Conductor (Taiwan), and access to industries not otherwise available e.g. Taiwan's Semi-conductor industry, Hong Kong's Property sector, China's Insurance and Aerospace industries, Korea's Ship Building industry. The Fund is benchmarked against CNX Nifty (65) and MSCI AC Far East Free Ex-Japan (35). The expense ratio of the fund is 2.66% and the portfolio turnover ratio is 106%.