Why you should Invest in a Global Fund ?
Why Invest in a Global Fund?
Investors shy away from the international funds as they find them risky and complicated. But this is not true. The International funds offer excellent investment opportunities with parallel risks. We will help you understand how the International stocks and funds offer you an opportunity to diversify, provide higher growth opportunities, and have the potential to lower risk in your portfolio.
Technological advancements and disrupters in the US, Natural Resources in Australia & Brazil, A young & educated workforce in Singapore are some of the examples of diversified global opportunities.
Key Takeaways
- Explore the growth opportunities in the global market space
- Global Investing will help in Reducing Risks
- Impact of Currency fluctuation on the returns
- Recommended Global Funds
- NFO Review – Axis Global Alpha Equity Fund
Explore the growth opportunities in the global market space
- India has more than 5000 listed companies but accounts for only 3% of the world market share
- Very few Indian Companies in the near term can achieve the global stature, global scale, customer base, and competitive moat which giants listed in global markets have.
- Investment Opportunities in the sunrise sectors are missing as such kind of companies are not listed on Indian exchanges. For e.g E-commerce Giant like Alibaba, Amazon or Internet giants like Facebook & Alphabet.
Global Investing will help in Reducing Risks
It is percived widely that the investment in global markets will expose us to higher risk, but data show otherwise. India being a developing economy has higher volataility as compared to developed economies.
Even the low co-relations between different markets can bring down the risk in your investment portfolios. The Corelation of Indian markets with other markets can be summarised as below
US Markets 0.13
Japan 0.13
UK 0.30
China 0.43
Europe (excl. UK) 0.30
World 0.25
Does the above surprise you .. You always thought Indian and US markets move together isnt it… The above data is from 1st Jan 2003 to 31st March 2020 – co-relation on daily returns series considered over the period. Source : Axis AMC and Bloomberg
Different markets globally have performed in different ways at different times, have a look …
Source: Axis AMC. Bloomberg Returns in INR. as of 30th June 2020. All returns are absolute
.
Impact of Currency fluctuation on the returns
Indian economic condition combined with its global trade situation has always made the case of a Depreciating currency. The rupee has depreciated from Rs 43.07/- on 1st March 07 against a dollar to Rs.73.52 currently. The Indian Investors have benefited from the depreciating currency.
The Global Investment will also act as a hedge for the investment of your goals to be funded by foreign currency. The goal of sponsoring Education fees for your children in a foreign land may be achieved by investing systematically in the global funds and protect yourselves from the currency risk.
Recommended Global Funds
NFO Review
Axis Global Alpha Equity Fund
The Fund is an FOF scheme investing in Schroder International Selection global Equity Alpha fund which manages assets worth US$ 1.34 Billion.
The Fund is a well diverisfied global fund focusing on Core Growth. The fund is unconstrained and can invest in best ideas in any geography. The Fund has a global strategy which can switch seamlessly across countries and opportunities with an endavour to benefit from global dynamics.
Benchmark for the fund is MSCI World NR
Fund Inception : July 2005
Performance in INR – 1 year – 22%, 3 year – 15.2%, 5 years – 11.2% & 10.5% since inception
NFO Period : 4th Sept to 18th Sept 2020
Top 10 Holdings
- Amazon.com Inc – 4.6%
- Alphabet Inc – 4.5%
- Microsoft Comp – 4.4%
- Visa Inc – 4%
- Adobe Inc -3.7%
- Facebook Inc -3.5%
- Unitedhealth Group Inc -2.7%
- Intuit Inc – 2.3%
- Jpmorgan Chase & Co -2.3%
- Philip Morris International – 2.2%
Should you invest in the NFO ?
Investing Globally not only provides the much needed access to the business which are truly global but also adds diversification that’s neccesary to build a healthy Investment portfolio.
The Schroder International Selection Fund Global Equity Alpha is truly diversified global investment , not concentrated in a single market and not inclined towards investment in a single sector.
Investors can allocate up to 40% of their portfolio to Global funds. We advise investment in the fund as a part of the long term allocation. One can also select the SIP/ STP route to gradually increase exposure in the fund.
Send me an email at mansi.bhambhani@biainvest.com, if you want to know further on Global investing, would be glad to help.
Do leave your comments and share your views.
Source of info : Axis AMC website and Fund Presentation