Falling Re, better returns in global markets help
Mutual funds that invested in foreign stocks and overseas funds delivered better returns than those that invested in India in the last six months.
As many as 24 of 30 such ‘global funds' outpaced the Sensex between October 3, 2011 and April 3, 2012. Global funds made 19.8 per cent compared to the 8 per cent returns managed by diversified equity funds that invest in Indian stocks.
Better stock market returns in several emerging markets, including South-East Asia and Latin America, and the rally in the US and some European countries helped the ‘global funds'. Returns also got a leg up from the strengthening of the dollar by about 3 per cent and the even steeper appreciation in several emerging market currencies against the rupee also propped up returns.
Viewed in rupee terms, leading stock exchanges in several markets in Asia, such as China, Singapore, Thailand, Korea, Malaysia and Indonesia, were up 21-34 per cent over the past six months. Latin American markets such as Brazil and Mexico rose 25-30 per cent.
Piggybacking on this, funds such as JPMorgan JF Asean Equity Offshore, HSBC Brazil, Mirae Asset China Advantage and Franklin Asian Equity that invest in some of these markets gained 26-32 per cent.
Some of the global funds benefited by focussing on agri-business stocks listed in the US, Canada and some European countries. Stocks such as Monsanto, Viterra, Bunge and Syngenta shot up by 21-60 per cent in the six-month period.
Funds such as DWS Global Agribusiness Offshore and Birla Sun Life CEF – Global Agri Plan were up 26-28 per cent in this period.
What also helped many global funds was the fact that many Asian as well as Latin American currencies, such as the Mexican Peso and the Brazilian Real, were up 4-9 per cent against the dollar. They gained 8-12 per cent against the rupee, thus adding to the global funds' returns.
The only set of global funds that saw losses in this period were gold funds, as the stocks of gold-mining companies fell substantially over the past six months. Gold prices remained flat.