Retail Indian investors who believed investing in funds that buy overseas assets will yield higher returns are beginning to see their faith rewarded after a long wait.
Funds such as Birla Sun Life Commodity Equities Fund , Fidelity Global Real Assets Fund , and ING OptiMix Global Commodities are outperforming domestic funds, due to the recovery in the west and concerns over Indian companies' earnings growth.
Rising commodity prices, which have been a drag on Indian equities, have done the opposite for international funds, helping them gain as the prices of copper, crude and rubber rise. This is the first time international funds have met their prime investment objectives - to stay non-correlated to Indian markets, provide portfolio diversification and generate higher returns.
Principal Global Opportunities, launched in March 2004, is India's first international fund. In 2007 and early-2008, several other fund houses also launched international funds. The idea, however, did not catch on, since most funds underperformed the local market during the 2008 market meltdown.
"This is the first time that international funds have done better than the local market funds," says Harmendra Shah , vice-president, IPO & mutual funds, Sushil Financial Services. "Overseas markets have performed better than the Indian markets; this is one reason why international funds have done well this year."
DEEPAK KUMAR
PGDM 2 ND SEM
Funds such as Birla Sun Life Commodity Equities Fund , Fidelity Global Real Assets Fund , and ING OptiMix Global Commodities are outperforming domestic funds, due to the recovery in the west and concerns over Indian companies' earnings growth.
Rising commodity prices, which have been a drag on Indian equities, have done the opposite for international funds, helping them gain as the prices of copper, crude and rubber rise. This is the first time international funds have met their prime investment objectives - to stay non-correlated to Indian markets, provide portfolio diversification and generate higher returns.
Principal Global Opportunities, launched in March 2004, is India's first international fund. In 2007 and early-2008, several other fund houses also launched international funds. The idea, however, did not catch on, since most funds underperformed the local market during the 2008 market meltdown.
"This is the first time that international funds have done better than the local market funds," says Harmendra Shah , vice-president, IPO & mutual funds, Sushil Financial Services. "Overseas markets have performed better than the Indian markets; this is one reason why international funds have done well this year."
DEEPAK KUMAR
PGDM 2 ND SEM
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