Global funds lose steam in the past six months

Suresh Parthasarathy | Updated on August 08, 2011


As a category, underperform Sensex

Indian investors who wanted to get away from the domestic issues of scams and inflation may have turned to international funds a year ago. But the returns on these funds have taken a turn for the worse over the past six months.

According to data from Value Research, the 25 international funds investing in equity, real estate, commodities and fund of funds suffered a bigger fall than Indian markets in the last six months. Global funds as a category lost 9 per cent against 1.8 per cent by the BSE Sensex.

The top losers among the global funds were those which had exposure to commodity stocks — Birla Sun Life Commodities-Global Multi Commodities Plan lost 21.4 per cent, and Birla Sun Life Equities-Global Multi Commodities Agri Plan, 20.8 per cent. DSPBR World Mining lost 18 per cent in the past six months.

Equity schemes

During the same period, the Indian market barometer indices BSE Sensex and S&P CNX Nifty lost 1.8 per cent and 1.2 per cent, respectively.

With global equity markets too weakening, the funds that invested in overseas equities too didn't do too well. Among the equity funds, ING Latin America Equity lost 17.2 per cent followed by Hang Seng BeEs, which lost 12.9 per cent.

Not only did the funds that have direct exposure to equities suffer, even those investing in international mutual funds did. DWS Global Thematic Offshore fund lost 12.6 per cent. The fund invests 80-100 per cent in securities issued by overseas mutual funds or unit trusts.

The rally in gold prices helped funds that bet on gold mining stocks hold on to their NAV, but they didn't manage significant positive returns. Funds with emerging market focus fared relatively better with Kotak Global Emerging Market losing 8.7 per cent followed by Birla Sun Life International Equity Plan and Mirae Asset China Advantage Fund losing a little over 8 per cent.

One-year performance: Investors who bet on global funds over a year ago are, however, still sitting on gains. The one year category average of the global funds is 5.3 per cent against 2.8 per cent lost by the Sensex and 2.5 per cent decline in the S&P CNX Nifty. DSP World Gold Fund managed 14 per cent and AIG World Gold Fund 18 per cent in one year.

Published on August 08, 2011

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