The plain-vanilla funds are down and out. The newer, and hopefully smarter, variants of funds are in. Today global funds are being touted as a better alternative by the fund houses than funds that invest in a single country. The argument: with a diversified portfolio spread across geographies, the downside is better protected than those fully invested in India.
| TOP SECTOR ALLOCATION | |
| Sector | Net Asset(%) |
| Financial Services | 22.03 |
| Energy | 15.25 |
| Technology | 11.44 |
| Metals & Metal Products | 7.47 |
| Diversified | 4.42 |
| STOCK SPREAD | |
| Rank | Percentage (%) |
| Large Cap | 43.3 |
| Mid Cap | 15.72 |
| Small Cap | 6.93 |
| Not Classified | 34.05 |
| TOP 10 EQUITY PORTFOLIO HOLDINGS | |
| Company | Net Asset (%) |
Though it would be too early to say whether international funds should become an important part of a portfolio, there could be a case for investors buying into this theme. However, they have to keep the faith that the returns will accrue only in the long run. These funds could prove to be less risky as well. Here’s an analysis of a few:
Birla Sun Life International Equity B
A truly diversified fund, till date it has invested in a total of 19 countries. Since January this year, the fund has progressively increased its foreign equity allocation from 21.50 per cent to 26.95 per cent in July. The fund has followed a disciplined investment strategy; rarely does it invest more than 4 per cent in any single stock. The portfolio is very well-diversified. Some of its favoured stocks include Bhel, Bharti Airtel and Crompton Greaves.
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Fidelity International Opportunities
This fund invests in over 10 countries, with a higher allocation to South Korea and Australia. On an average, the fund invests around 28 per cent in foreign equity and the rest in domestic equity. Its foreign allocation gives it an edge over an average equity-diversified fund. In the bear run, it has shed just 26 per cent compared with the category’s fall of 42 per cent. Stocks such as Sun Pharma, ICICI Bank and Axis Bank form the mainstay of the fund's portfolio.
ICICI Pru Indo Asia Equity Fund Retail
The fund has a very simple mandate — it will invest up to 65 per cent in domestic equity and the rest in IOF-Asian Equity Fund, which will invest the proceeds in shares of companies in Asia-Pacific region, excluding Japan. In India, energy and technology are its preferred sectors. Internationally, it has shown a preference for financial stocks. In a compact portfolio of 30 stocks, the top holdings are Reliance Industries, ICICI Bank and ONGC.
Reliance Natural Resources
Launched at the peak of the bull-run, the fund created a record by garnering over Rs 5,000 crore. However, a sharp drop in the stock markets have forced the fund manager to keep around 42 per cent of its assets in cash and 20 per cent in foreign equity. The rest are allocated towards domestic stocks with a larger allocation, nearly 23 per cent, to energy stocks. The fund boasts of high quality portfolio with stocks like Reliance Industries, Tata Steel and Arcelor-Mittal.
Templeton India Equity Income
The fund has done exceedingly well in the recent downturn. With a fall of just 26 per cent, it has protected its investors better than any other diversified equity fund. It's 29.66 per cent allocation to foreign equity is the highest amongst its peers. Out of the 18 countries that it has invested in, USA, Russia and Argentina have emerged as all time favourites. In domestic equity, ONGC, Grasim and RCom have been preferred in its 75 stock portfolio.
Value Research