The Hindu Business Line : HSBC MF lines up new global offering

Funds seeking to capitalise on international opportunities are growing in number at the global level and have attracted significant inflows. This trend appears to be catching up in India too.

HSBC Mutual Fund has filed a draft offer document with the SEBI for launching a fund that would invest in emerging markets.

Called HSBC Emerging Markets Fund, the fund seeks to invest in Argentina, Brazil, Russia, China and Central and East European countries, apart from India, either directly or through "international opportunities funds."

The fund will have both the BSE 200 and MSCI Emerging Market Index as its benchmarks.

Overseas funds are seen as vehicles using which domestic investors can diversify their portfolio and enhance their returns.

The MSCI Emerging Markets Index has delivered an annual return of 23.9 per cent over a five-year period ended November 2006, against the US market's return of 4.1 per cent.

International funds that invest in emerging markets have on an average delivered a return of 26 per cent over a five-year period and 31 per cent over the past year, according to the offer document, which cites fund research agency Morningstar.

Markets such as Vietnam and China have been outperformers in 2006, delivering returns of over 100 per cent.

According to the offer document, India is among the more expensive markets in the emerging markets pack, at a price-earnings multiple of 18 times its one-year forward earnings.

In contrast, China and Taiwan trade at 13 times, while Korea and Thailand are at 10 times their forward earnings.

Other mutual funds that invest in overseas markets include Templeton India Equity Income Fund and Principal Global Opportunities Fund.

DSP ML Mutual Fund also plans to launch its World Gold Fund, which will invest in gold mining companies in overseas markets.

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