Net AUM of overseas FoF up 216% in a year, shows Amfi data

Fund of Funds (FoFs) that in­vest in overseas mutual fund (MF) schemes have been gai­ning popularity over the past year. Net assets under management (AUM) of the category have seen an increase of 216 per cent in a year. Robust global markets, access to lea­ding global companies, and portfolio diversification are a few reasons for international investing being in focus.

The data from the Assoc­iation of Mutual Funds in India (Amfi) shows that net AUM of FoFs investing overseas stood at Rs 24,189 crore in November, against Rs 7,642 crore a year ago.

Niranjan Avasthi, head-product marketing and digital business, Edelweiss MF, says: “In the past two-three years, investors have realised multiple benefits of international investing — uncorrelated returns with the domestic markets, benefits of rupee depreciation by holding dollar assets, and most importantly, access to businesses and new-age technologies that are not present in India.”

While there are other modes like exchange-traded funds and index funds that invest in stocks in a proportion that matches the weighting of those international indices, FoFs invest in other existing MF schemes. For example, Mahindra Manulife Asia Pacific REITs FoF will invest predominantly in units of Manulife Global Fund-Asia Pacific REIT Fund, an overseas fund primarily putting money in real estate investment trusts (REITs) in the Asia Pacific ex-Japan region.

Market participants say international investing will become relatively dominant in the years to come as many emerging and new-age business models, especially in the technology domain, are expanding faster in markets like the US and China.