Mutual Funds
Franklin Templeton to launch Asian Growth, US Opportunities funds

By investing in these two foreign funds, you may or may not get greater diversification, but would you get higher returns?

More and more fund companies are furiously bringing foreign funds to India. It has almost become a fad. In March 2011, Franklin Templeton filed offer documents with the regulator to launch its FT India Feeder-Templeton Asian Growth Fund and FT India Feeder-Franklin US Opportunities Fund. As the names suggest, one invests in Asian securities and the other in US securities.

Feeder funds allow Indian investors to put their money in international mutual funds that would give them an exposure to companies in other regions.

The asset allocation plan is to invest 80%-100% in units/securities of overseas mutual funds/unit trusts with a medium- to high-risk profile. The scheme will also invest up to 20% in debt securities and money market instruments with a low- to medium-risk profile.

The US feeder fund will be benchmarked against the Russell 3000 Growth Index and the Asia Growth Fund will be benchmarked against the MSCI All Country Asia (ex-Japan) Index. The Russell 3000 Growth Index measures the performance of the broad growth segment of the US equity universe, with Exxon Mobil, Apple, IBM, Google, Microsoft, Oracle and Coca Cola among its top ten stocks.

The MSCI All Country Asia (ex-Japan) Index is a free float-adjusted market capitalisation weighted index that is designed to measure the equity market performance of Asia, excluding Japan. As of 31 December 2010, the MSCI All Country Asia (ex-Japan) Index covered the indices of 10 developed and emerging market countries, namely China, Hong Kong, India, Indonesia, Korea, Malaysia, Philippines, Singapore, Taiwan, and Thailand.

These funds will charge an exit load of 1% on units that are redeemed/switched out within one year of allotment. The minimum application amount is Rs5,000.

It is not clear what extra advantage investors would get by investing in these funds. Global funds offer diversification benefits by investing in stocks like bio-tech, technology, energy, agriculture and mining, which an Indian investor may not be able to buy by just investing in domestic schemes. But funds that put your money in other countries don’t necessarily offer higher returns or diversification.

In the period April 2009-March 2010, the Sensex was up 77%, while the MSCI All Country Asia (ex-Japan) Index was up 68%. Non-correlated market movement is not easy to find. As for returns, the Russell 3000 gave an annualised five-year return of 5.05% against the Sensex which gave an annualised return of 9% over five years ending 30 April 2011.

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COMMENTS

Suresh Singh Bisht

6 years ago

The advantage of interenational funds is diversification only though the returns may not be higher than the Indian markets. However, one should keep in mind that investing in interenational fund reduces risks to a extent as money is not invested in one market only.

BALWANT GODBOLE

6 years ago

wish to become agent

Cairn India net jumps 10-fold on higher oil price

While 2010-11 was the first full year of safe and consistent operations at the Rajasthan oil fields, Cairn realised $94.2 per barrel for oil produced in January-March quarter as opposed to $71 per barrel the previous year

New Delhi: Cairn India (CIL) today reported a 10-fold jump in its quarterly net profit on back of higher crude oil price and consistent performance at the nation’s biggest onshore oilfield in Rajasthan, reports PTI.

Consolidated net profit in the fourth quarter through March rose to Rs2,457.79 crore from Rs245.19 crore an year earlier, the Indian unit of Edinburgh-based Cairn Energy Plc said in a statement here.

While 2010-11 was the first full year of safe and consistent operations at the Rajasthan oil fields, Cairn realised $94.2 per barrel for oil produced in January-March quarter as opposed to $71 per barrel the previous year.

Mangala, the biggest oilfield in the Rajasthan block, is currently producing 125,000 barrels per day (bpd) but has potential to go up to 150,000 bpd without any new investment. But the oil ministry has for unknown reasons held back approval for raising output for nearly a year now.

“Our enhanced understanding of the Mangala reservoirs, following development drilling in the field, indicates a production potential of 150,000 bpd, subject to joint venture partner ONGC and government approval,” Cairn said.

With Mangala field consistently producing at approved plateau rate of 150,000 bpd, it is now focussed on the second phase of Rajasthan development.

Bhagyam field, the second largest find in Rajasthan, is likely to be put into production in October and will reach plateau production of 40,000 bpd by the calendar year end.

“We are now focused on the second phase of the Rajasthan development to reach the currently approved plateau production of 175,000 bpd, which will account for 20% of the country’s crude production," Cairn said.

Further, Cairn plans to put into production Aishwariya field in 14 months from the date it receives necessary government sanctions.

Aishwariya will produce 10,000 bpd sometime in second half of 2012 calendar year and together with 150,000 bpd of Mangala and 40,000 bpd of Bhagyan, total output from Rajasthan would be 200,000 bpd (10 million tonnes a year).

“In addition to the above, the enhanced oil recovery (EOR) pilot project in Mangala which commenced in early 2010 is progressing as per expectations. The successful implementation of EOR in Rajasthan has the potential to increase recoverable reserves by more than 300 million metric barrels of oil equivalent (mmboe), and materially extend the duration of the plateau production,” the statement said.

Cairn said it has sale arrangements in place for 155,000 bpd of oil from Rajasthan and it is in discussions with the government for finding buyers for additional volumes.

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BSE gets in-principle nod from SEBI for SME exchange

With a view to let smaller firms access equity capital, SEBI had last year come out with guidelines for dedicated exchanges for SMEs. As per the guidelines, a company can do away with the practise of sending full annual reports and reporting quarterly numbers

Mumbai: Bombay Stock Exchange (BSE), Asia’s oldest bourse, today said it has been granted an ‘in-principle’ approval by the capital market watchdog Securities and Exchange Board of India (SEBI) to launch an exchange exclusively for small and medium enterprises (SMEs), reports PTI.

“BSE today received an ‘in-principle’ approval... the BSE is now gearing-up for its latest venture in an emerging market segment,” a release issued here by the BSE said.

A senior exchange official said the BSE has to now comply with certain conditions like putting in place a trading system, a code for arbitration and sorting out investor grievances, among others, before a final approval is given.

The BSE has been working to put the systems in place for some time now and a dedicated SME exchange will be operational “definitely” in this fiscal itself, he said.

The official declined to give an exact number when asked about the investment BSE is making towards the venture. The new exchange will operate on the BSE platform, he said.

With a view to let smaller firms access equity capital, SEBI had last year come out with guidelines for dedicated exchanges for SMEs.

Considering the lean nature of the companies which will list, SEBI has relaxed rules applicable for listing on such exchanges.

According to the guidelines, a company can do away with the practise of sending full annual reports and reporting quarterly numbers.

Apart from the BSE, its competitor in the equities trading space, National Stock Exchange and the privately promoted MCX-SX, have also shown interest in entering the upcoming segment, according to media reports.

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