The Hindu Business Line : Principal Global invests most in European stocks

EUROPEAN stocks dominate the portfolio of Principal Global Opportunities Fund, the only scheme in India that invests in international equities. The maiden count indicates an allocation of over 41 per cent to companies listed in Europe, with US and Japanese outfits accounting for 33 per cent and 26 per cent respectively.

Philips, Proctor & Gamble, Siemens, Ricoh and Cummins are the fund's top five holdings in that order. As on April 12 (the first portfolio has not been released officially), Philips was the No. 1 pick, contributing 7.83 per cent of the net assets. These are followed by the likes of Nestle, Denso Corp, Sulzer AG, Wyeth and Monsanto. All ten names are known well in India.

Principal Global seeks to develop a portfolio of international stocks, subject to limits defined by regulators. SEBI norms currently allow Indian funds to invest in securities of listed overseas corporates that have at least 10 per cent stake in a listed Indian entity. In this case, up to 100 per cent of the scheme's assets can be parked in such securities.

A statement from the fund house reveals that the sectoral allocations are led by industrials (31 per cent), consumer discretionary (20 per cent) and consumer staples (16 per cent). The top 10 companies accounted for well over 60 per cent of the portfolio. The regulatory guidelines, according to Principal MF, allow access to certain strong entities in foreign markets. The investment universe is diversified because of the variety available in such markets as in Western Europe, the US and the Pacific Rim (Japan, Korea, Singapore and the like).

The MF also points out that the scheme (which has March 29 as its date of inception) in question is completely new for Indian investors. A model portfolio was developed earlier that included P&G, Ricoh, Philips, Ingersoll-Rand, Colgate-Palmolive, 3M, Sharp and BASF. The scheme, benchmarked against the MSCI World Index, has a NAV of Rs 10.18 (as on April 23). Its assets stand at over Rs 65 crore.

It may be mentioned here that the fund's NAV is determined on a given day using market data from all the exchanges on the same date. However, considering the variations in time zones, the NAV is announced on the next business day. The applicable NAV therefore relates to T+1.