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FUND MANAGER 2006

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Window to the World

SHOBHANA SUBRAMANIAN

A slew of funds is giving investors an opportunity to punt on foreign stocks.

To be sure, India is the flavour of the season. The second fastest growing economy in the world is seeing its biggest bull run ever with the benchmark Sensex having crossed the 18,000 mark. But there are other economies that aren’t doing too badly; despite its dream run India has actually underperformed several markets in the region over the past year. And it’s these opportunities in economies such as China, Brazil and even perhaps Africa, that fund managers believe they should tap.

Now that the industry can buy up to $5 billion worth of stocks overseas and a single asset firm can shop for as much as $300 million, they’re not wasting too much time. In the last month alone nearly half a dozen asset management firms have come up with schemes that will pick up shares in Microsoft or Nokia. Or they will simply buy into an overseas fund . Whether it’s an ABN Amro, a Birla Sun Life or a Kotak AMC, they’re all giving investors a taste of foreign equities. For those who feel they could use some amount of exposure to overseas markets, here’s the chance.

SPREAD THE RISK

It’s not just about growth, it’s also about managing risk. The Indian economy is clocking a 9 per cent GDP growth and has a large universe of stocks to buy into. But other markets too offer opportunities. Explains A Balasubramanian, CIO, Birla Sun Life, “While the Indian market has given good returns, countries such as Russia and Brazil are doing well and there are stocks that offer good value.”

Balasubramanian points out that returns from Emerging Markets (EM) as a category have been at par or even better than those from the Indian market in recent times. Adds Sandesh Kirkire, CEO, Kotak AMC, “Markets can be volatile and it would be wrong to think that India can outperform other markets consistently.” THE FEEDER ROUTE For starters, several funds are opting to simply park the corpus in an existing fund instead of managing the money themselves. Kotak AMC, for instance has just wrapped up its three-year close-ended fund, and will invest the entire amount of Rs 518 crore in T. Rowe Price Funds SICAV - Global Emerging Markets Equity Fund, which invests in equities in the emerging economies of Latin America, Asia, Europe, Africa and the Middle East.

VED PRAKASH CHATURVEDI MD, Tata Asset Management We've chosen to buy infrastructure stocks both in India and abroad

The fund has chosen to benchmark itself against the MSCI Emerging Markets Index. ICICI Prudential AMC will park 35 per cent of its corpus in the Asian Equity Fund (AEF), which invests across the Asia-Pacific region, ex-Japan and invest the rest in domestic stocks. The feeder route has its own advantages.

Continued on next page

Business Standard • FUND MANAGER • October 2007