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With the rupee depreciating to 68 against the dollar and expected to fall further, launching a global fund is challenging. ICICI Prudential has tied up with Nordea Asset Management Company, which manages asset worth €140-billion. ICICI Prudential Global Stable Equity Fund would invest in units of Nordea 1 — Global Stable Equity Fund, which in turn invests in some of the largest global companies.
Nimesh Shah, Managing Director, ICICI Prudential AMC, and Allan Polack, CEO, Nordea AMC, spoke to Business Line on the prospects of the scheme and investments in mutual fund.
Excerpts:
With recent development in India, how do you see our markets?
Given the situation that we are facing in our market today, we felt it was the right time that a part of investors’ net worth be invested in global companies. Global economies are on the path to recovery and equities there are available at reasonable valuations. Indian investors can choose to make attractive global assets a part of their portfolios.
The idea behind the launch of ICICI Prudential Global Stable Equity Fund is to provide an opportunity to Indians to invest in a global product that provides them access to investing in stable companies across the globe.
Is rupee depreciation a main reason for the launch?
The same question was asked when we launched our US Blue Chip fund. That time rupee depreciated from 51 to 56.
Today, the fund has given a return of 50 per cent. What I mean is rupee depreciation is just incidental. We did not plan it that way. We simply believe in coming up with the right product at the right time. One year ago we believed that the US market was a place to invest in.
Are you concerned that investors are exposed to global vagaries?
No it works other way round. We are quite volatile as a country in terms of equity fund performance. Returns here are either maximum or it is down in the dumps. Thus, we need a product with low correlation with the Indian equity markets. So, basically you need a product which is global in nature and more stable than the funds in India.
Why not an Indian debt product for stable return?
There is no correlation between Indian debt and the way global funds work. It should not be compared with the debt market at all.
Here stability comes out of diversification across businesses, stability comes out of diversification across currencies and it comes out of proven track record of the corporates they invest in.
Why the tie-up up with Nordea AMC?
We already have a working relationship with Nordea. We manage $300 million of their funds which was part of the global funds raised by Nordea in Europe. This is like a partnership between two manufacturers. I do not have global expertise while they do not have India expertise for managing funds. But we both have distribution networks in each of our geographies. So, we get together. They manage global funds for us and we manage India funds for them.
What are Nordea’s criteria for investment?
The filters for investments employed by Nordea are quite interesting. They do not have any country specific filters, but look for companies which are global in nature. The $10-billion Nordea Global Stable Equity Fund sees to it that the revenue of companies it invests in have stable cash flows from across the world. It had dividend yield of about 2.9 per cent. Apart from currency diversification, it gives business diversification and stable returns. That’s what you are buying when you buy the ICICI Prudential Global Stable Equity Fund.
Who are the major investors in the fund?
Allan Polack: We are an asset manager owned by a bank, just like ICICI Prudential is to ICICI Bank. So, there are big similarities between the two of us.
We look at distribution through the bank and other sources.
The bank has a presence in Europe or the so-called Nordic countries, such as Denmark, Norway and Sweden.
We also serve banks globally. So, we have the big global banks, such as Citi, HSBC and BNP Global. Our next channel is institutions such as pension fund, insurance company and sovereign funds. Institutions are places where we discuss with the Indian advisory.
And the biggest single client that we have for this product is an American institution.
How is the global economy doing?
AP: It’s actually interesting that this little uncertainty we’ve had in the last few months came out of something more positive. So, it’s a kind of contradiction that a positive signal for American growth, which in a way is good for the global economy, which is good for the Indian economy turned out to be negative.
We have positive trends from three economies — US, Germany and Japan. We are very worried about the European situation.
>suresh.iyengar@thehindu.co.in
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