- Innovative, first-of-its-kind fund that provides exposure to securities of commodities, real estate and more
- Underlying fund aims to deliver superior returns by investing in listed securities that are both positively and negatively correlated with commodity prices
In a time when inflationary pressures are threatening to increase in the medium term, owning ‘real assets’ whose value and returns are directly linked to or, indeed, in some cases are the root cause of rising prices is a strategy worth serious consideration. To capture the longer term potential that these key sectors offer across both developed and emerging markets, Fidelity International launched the Fidelity Funds - Global Real Asset Securities Fund in September 2009, an innovative, first-of-its-kind fund that invests in securities of commodities, real estate and other real assets.
This Fund is now being made available to investors in India via the feeder fund route. Fidelity Mutual Fund has announced a new fund offer (NFO) for the Fidelity Global Real Assets Fund, which will be primarily invested in Fidelity Funds - Global Real Asset Securities Fund, an offshore fund launched by Fidelity Funds (an open ended investment company incorporated in Luxembourg). The investment objective of the underlying scheme is to achieve long-term capital growth from a portfolio primarily invested in equity securities of companies across the world that provide exposure to commodities, property, industrials, utilities, energy, materials and infrastructure. The NFO is open until January 29, 2010.
Speaking about the launch of the new fund, Ashu Suyash, Managing Director and Country Head – India, Fidelity International, said, “Indian investors have always had a soft spot for physical assets, like gold and real estate. The Fidelity Global Real Assets Fund brings you the option of adding a whole range of physical or real assets through the convenience and affordability of a diversified equity fund. At a retail level, we believe, that it is a unique, first-of-its-kind fund that offers an alternate asset play with all the liquidity benefits of a mutual fund.”
The Fidelity Global Real Assets Fund is targeted at investors who believe in the twin drivers of medium term rising inflation and long-term secular development of the emerging world, yet appreciate that the timing of allocation to specific sectors is hard to predict with any accuracy. Amit Lodha, portfolio manager of the Fidelity Funds - Global Real Asset Securities Fund, has an investment process that selects companies regardless of size, industry or location which will result in a concentrated portfolio of high conviction, attractively valued holdings that give exposure to a wide opportunity set within real asset securities. He also has direct investment experience of researching the majority of the sectors included in the Fidelity Funds - Global Real Asset Securities Fund’s benchmark.
Commenting on the fund, Mr. Lodha said, “I believe that the Fidelity Funds - Global Real Asset Securities Fund provides investors with the opportunity to benefit from a new type of investment approach from Fidelity International by combining thematic thinking and bottom-up stock idea identification. The allocation to thematic drivers will be dynamic and anticipate and exploit different points in the economic cycle – not just when there is a commodities/resources bull market.
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“To support this approach I can draw on the global reach of more than 100 investment analysts around the world – based in local markets. The breadth and depth of this research enables me to choose from companies, irrespective of the domicile of their listing, that are best positioned to gain from the urbanisation and industrialisation of the emerging economies. Combined with this long term thematic, the fund is also well positioned for the threat of returning inflation given the ramifications of the scale of global quantitative easing. The quest would be to find companies that can maintain pricing power in that environment.
“The wide opportunity set of the Fidelity Funds - Global Real Asset Securities Fund, containing as it does both areas of the market that are positively and negatively co-related to underlying commodity prices, gives investors access to the long-term drivers of the emerging economies but without having to rely on their own timing skills to enter specific sectors.”
The Fidelity Funds - Global Real Assets Securities Fund has a custom benchmark which is a blend of the following indices - MSCI ACWI Industrials, MSCI ACWI Real Estate, MSCI ACWI Utilities, MSCI Materials and MSCI Energy. The weights assigned to each individual index while calculating the custom benchmark is 20%, 20%, 10%, 20% and 30% respectively.
Since launch in September 2009, the Fidelity Funds - Global Real Asset Securities Fund has outperformed its benchmark by 1.8%. FGRAF returned 16.10% while its custom benchmark had returns of 14.3%. The Fund was seeded by an internal Fidelity pilot fund, which since inception in January 2009 has delivered 86.2% returns. When compared to the BSE Sensex, the Fidelity Funds - Global Real Asset Securities Fund has outperformed by 3.2% since inception in September 2009, while the pilot fund has outperformed the Sensex by 9.9% over a one year period. (All returns figures are as at 31.12.09.)
The minimum amount for lump sum investments in to the Fidelity Global Real Assets Fund is Rs 5000. The Systematic Investment Plan (SIP) option will be available during the NFO period with a minimum of six instalments and each single instalment of a minimum of Rs. 500 totalling not less than Rs. 5000. There is an exit load of 1% for redemptions within one year of allotment / purchase. The Fidelity Global Real Assets Fund NFO is also available on the Bombay Stock Exchange and the National Stock Exchange.
About Fidelity:
Fidelity International's Indian asset management company started operations in the country with its first fund, the Fidelity Equity Fund, which was launched in March 2005. Today, with total assets under management of over Rs. 8400 crores (average AUM in December 2009) and more than 16 lakh customer accounts, Fidelity offers Indian investors investment options through its five equity funds and five fixed income / hybrid funds. For more information, please visit www.fidelity.co.in
FIL Fund Management Private Limited is the Indian arm of Fidelity International, one of the world's leading global investment management companies with operations in 23 countries and more than US$ 210 billion in assets under management (as at September 30, 2009). FIL provides mutual funds, retirement services, including defined benefit and defined contribution pension schemes, and specialist institutional mandates to individual and institutional investors outside the Americas. FIL's US affiliate, Fidelity Management and Research LLC (FMR) is one of the US' largest mutual fund companies and manages over US$1.4 trillion (as at September 30, 2009) in assets. FIL has constant access to the investment analysis carried out by FMR and Pyramis. Central to Fidelity's success is a pioneering spirit, a commitment to innovation that sets new industry standards and an unmatched investment in research, talent, technology and investor education.
