Mutual Funds
Three top fund houses plan funds to invest in ASEAN, Indonesia, Nasdaq

JP Morgan, Motilal Oswal and Reliance file offer documents with SEBI to raise money to invest in overseas securities 

Mutual funds with investments in foreign stocks are back in fashion. A number of fund houses are planning to raise money domestically and invest in overseas securities. Three prominent names-JP Morgan, Motilal Oswal and Reliance-have filed offer documents with the Securities and Exchange Board of India (SEBI) to launch international funds.

JP Morgan has filed an offer document for two open-ended schemes. One is the ASEAN Equity offshore fund that will invest in ASEAN countries, which include Singapore, Indonesia, Malaysia, Thailand, Vietnam, Philippines, Cambodia, Brunei, Laos and Myanmar. This fund will be benchmarked against the MSCI South-East Asia Index. The other is the JP Morgan Global Natural Resources fund. This will invest primarily in natural resources companies globally, many of which are in the early stages of exploration. The scheme's performance will be benchmarked against the HSBC Gold, Mining & Energy Index.

Motilal Oswal Mutual Fund has decided to explore investment opportunities in the US. It proposes to launch an open-ended exchange traded fund called MOSt Shares NASDAQ-100 ETF. This fund will have an exposure to shares that are a part of the NASDAQ-100 index and will be benchmarked against the NASDAQ-100. It will give Indian investors an opportunity to take an exposure to American stocks like Microsoft, Google, Amazon, Yahoo, eBay. The NASDAQ-100 index does not have stocks of financial companies.

Reliance plans to launch Reliance Indonesia Opportunities Fund, just when Moody's has placed Indonesia's sovereign credit rating on review for a possible upgrade. Reliance's Indonesian fund will be benchmarked against Morgan Stanley Capital International's (MSCI) Indonesia index.

Are these funds worth taking a look at? As pointed out in Moneylife magazine, in March 2010, (Read, 'Global mission, local fission,) there are enough reasons to avoid investing in these funds. First, these are fads. When the commodity markets are shooting up, fund companies will launch commodity-focused equity funds. When the Chinese market is hot, they will launch a China fund. Indonesia has been one of the best-performing markets of the past decade and so there is an Indonesian fund. Emerging markets require huge amounts of infrastructure, so a global infrastructure fund has been very popular.

Foreign funds can help us in diversifying our portfolio but it is debatable whether actively managed funds of specific countries are worth it. It exposes our portfolio to some unusual risks. It amazes us that fund companies may not know much about the value and the price of the Indian stocks, but they surely don't lack confidence in exhorting you to invest in a fund that invests in foreign stocks.

Let's have a look at how these funds have performed till date. Eleven out of the 16 international funds have outperformed their benchmark since inception. However, many of the outperforming funds were launched in 2008, when stock prices worldwide had crashed and hence were able to ride the subsequent rally without having to do much.

The only fund worth considering out of these offerings is the Motilal Oswal NASDAQ-100 ETF, which offers Indian investors a genuine scope for diversification with the hundred diverse stocks that make up the Nasdaq universe. These companies also bear little correlation with the Indian stock markets.




6 years ago

So according to your research what you suggest people should diversify their portfolio with local funds and foreign funds or not and if yes what should be ratio for it.

venekat ram

6 years ago

best investment mutual funds in 2011 by monthly plan

India to grow by 8.7% in current fiscal: Fitch

New Delhi: Global rating agency Fitch expects the Indian economy to grow by 8.7% in 2010-11, which means that growth may slow down in the second half of this fiscal, reports PTI.

"Fitch expects economic growth of 8.7% in FY11," the rating agency said in a report.

Since the Indian economy grew by 8.9% in the first half, Fitch projections mean that it will expand by a slower growth rate in the second half.

The growth rate projected by Fitch is higher than that estimated by prime minister Manmohan Singh but lower than forecast by the finance ministry's Mid Year Review.

The PM expects the country's economy to grow by 8.5% in the current fiscal, while Mid Year Review forecast up to 9.1% growth in the current year, subject to improvement in the European economic conditions.

However, Fitch expects the country's economy to grow slightly less in the next fiscal, at 8.5%.


Tata Communications signs definitive agreement to acquire BitGravity

Tata Communications said that it has reached a definitive agreement to acquire BitGravity, a content delivery network (CDN). BitGravity's network and products accelerate the delivery of media assets to end-users and enables scalable, real-time video communications over the Internet. Upon successful completion of the transaction, Tata Communications (Netherlands) B.V. will own 100% BitGravity, Inc., which will operate as a wholly-owned subsidiary of Tata Communications. The financial details were not provided.

In 2008, Tata Communications entered into a strategic alliance with BitGravity that included the licensing BitGravity's CDN technology and the federation of BitGravity's and Tata Communications' delivery networks. The company also made a strategic investment of $11.5mn in BitGravity. The alliance enabled Tata Communications' to enter the market with its own global CDN in 2008 and has resulted in successful traction with high profile media, content and gaming companies in Europe, Asia and India such as NDTV, IAH Games, Quick Heal Technologies and Nimbus Communications.  

BitGravity, a privately held company in Burlingame, California, was founded in mid-2006 and launched its services in 2008.  

On Tuesday, Tata Communications ended 3.30% up at Rs256.85 on the Bombay Stock Exchange, while the benchmark Sensex declined 0.14% to 19,196.34 points. 


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