The Hindu Business Line : Fund houses push for globally oriented funds

Mumbai, June 12 Mutual fund schemes which will invest globally are quite a flavour among the New Fund Offers for which draft offer documents have been filed with the SEBI since March.

The other “flavours” among the NFOs are commodities and natural resources, as well as banking and financial services. “The globally-oriented funds are a method of diversification, which help reduce risk and at the same time optimise returns,” said Mr Vineet K. Vohra, Managing Director & CEO, ING Investment Management.

Amongst the draft offer documents filed for globally oriented funds, there are three filed by ING Mutual Fund, one by Mirae Asset and one by UTI, the only Indian mutual fund among these to do so.

The ING Latin America Fund will primarily invest in ING (L) Invest Latin America Fund, which is a Luxembourg-based fund, while the ING Global Access Fund is an umbrella fund, which would have seven plans feeding into seven different strategies, managed by ING Investment Management. The ING US Opportunistic Fund will also primarily invest in ING’s Luxembourg-based fund, which is focused in investing in the US.

Mirae Asset Global Commodities Stock Fund will invest at least 65 per cent of its assets in stocks or mutual funds, operating in the Asia Pacific and emerging markets; while UTI Global Emerging Markets Fund will invest pre-dominantly in global markets.

Unique buyers

“Many of the funds have the factor of novelty in their investment focus. For example, a Latin American investment fund etc…might find some unique buyers,” said an analyst with a brokerage house.

For the mutual fund house, as a whole, the ceiling for investment overseas is of $500 million, with no-sub ceilings for individual schemes. The aggregate ceiling for overseas investment by mutual funds registered with the Securities & Exchange Board of India (SEBI) is $7 billion. There are almost 15 mutual funds, which have offshore-based funds as on May 31, according to the data provided by the Value Research.

“The demand for commodities is on the rise and a commodities focused fund will serve as a different asset class and diversify the portfolio,” said Mr Arindam Ghosh Chief Executive Officer, Mirae Asset Global Investment Management (India).

Birla Sun Life Commodity Equities Fund, one of the NFOs planned, would invest in the stocks of commodities-based companies. In the commodities space, there is also Tata Gold & Precious Metal Fund. The three natural resources funds are DBS Chola Energy and Natural Resources Fund, Tata Natural Resources Fund, and ING Global Natural Resources Fund.

The schemes that have a local focus are mainly the banking and financial sector oriented schemes, with HSBC Mutual Fund, SBI Mutual Fund, ABN Amro Mutual Fund and ICICI Prudential Mutual Fund having filed draft offer documents.