MFs step up launches of schemes seeking to invest in foreign markets

Most funds in FoF space chasing unique themes

The domestic mutual fund (MF) industry has launched a number of unique theme-based schemes seeking to invest in foreign markets. All of these schemes are so-called fund of funds (FoF). A FoF invests in other MF schemes instead of directly investing in stocks or debt instruments.

Some of these include Mirae Asset NYSE FANG+ETF, which is a basket of growth stocks of next generation technology and tech-enabled companies. BNP Paribas Funds Aqua FoF, that invests in global companies that are part of the water value chain.

“The underlying fund intends to identify global companies that are growing faster than the broader market and with a slightly higher mid-cap bias. With a deeply embedded environmental, social and governance (ESG) framework, this fund also seeks to have a positive environmental impact,” says Chockalingam Narayanan, Head of Equities, BNP Paribas MF of the Aqua FoF.

On Thursday, Axis MF announced the launch of FoF called ‘Axis Global Innovation’, which will invest in Schroder International Selection Fund Global Disruption, an equity fund that invests in global companies that benefit from disruption.

“Thematic products allow investors to participate in important structural themes in a targeted manner. In that context, we are extremely excited to offer investors a product that captures one of the most significant themes of the current age – disruptive innovation precipitated by technological advancements and changes to the business environment,” said Chandresh Kumar Nigam, MD & CEO, Axis AMC.

Earlier, Axis MF had launched Axis Greater China Equity FoF, while HSBC MF had come out with HSBC Global Equity Climate Change FoF.

The launch of such schemes comes on the back of growing interest in international FoFs. This category has seen positive monthly inflows from investors for nearly three years beginning with May 2018. Inflows into international FoFs have accelerated in the past seven months at a cumulative Rs 6,800 crore. The assets under management (AUM) for this category has surged 2.4 times during this period to Rs 12,408 crore at the end of March 2021.