The Hindu Business Line : Principal MF aiming better days for global fund

The fund, billed as the first international equity fund in the Indian asset management space, has seen global markets turn in positive returns in July. This is reflected in the MSCI World Index, which rose 0.6 per cent during the month. In particular, the healthcare sector posted 3.8 per cent and the utilities and energy sectors looked up as well.

Principal Global Opportunities - its assets are spread over Japan (28 per cent), Europe (27 per cent) and the US (24 per cent) - is banking on stocks it is overweight on. The current portfolio's most overweight positions include Colgate-Palmolive (accounting for over 5 per cent of the assets), Atlas Copco and Sumitomo Corporation.

Under performance

The fund, which provided minus 0.7 per cent, actually under performed MSCI World Index in July. This, according to Principal MF, is chiefly because of overweight position in industrials, which did not perform so well during the month. Nevertheless, stock selection in areas such as information technology, materials and healthcare had a positive impact. Incidentally, industrials returned a negative 3.4 per cent, it is pointed out.

As for specific holdings, Sumitomo Corporation reported a 40 per cent increase in first quarter profit on a year-on-year basis. The company's metals division recorded gains even as copper prices moved up. Its stock price increased 7.5 per cent in July.

Ingersoll-Rand, which accounted for 3.5 per cent of the fund's assets, declined by about 16 per cent. This was largely because of higher material coststhat affected profit margins in businesses such as climate control, security and refrigeration. Its second quarter profit increased by 10 per cent.

The fundstill has a small asset base of about Rs 15 crore. It has provided 12.2 per cent since inception in March 2004. In comparison, the MSCI World index gave10.4 per cent during this period.

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