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Indian bourses down? Invest overseas through Feeder Funds

Monday, May 28, 2012
Anand Birai

With the devaluation of Indian rupee for a year now, if that is a boon for the export industries, it is also a bane for the imports. As a mutual fund investor, if you are worried over the uncertainty of currency value and also want to take advantage of the same, there is a window for you and which is the feeder funds. Besides currency value differentiation, during the times when the outlook on Indian equities is also negative, there is opportunity to park funds in the country that you want.

The feeder funds are relatively new to the Indian investors and yet the waters are to be tested as the funds were allowed to function in the country this calendar year. The first fund was launched only in January and hence, it is not advisable to evaluate the feeder funds’ performance so early. Also, there is no reason to rush for it but after looking at the Fact Sheet of the fund and other information one can take a partial exposure in feeder funds.

The feeder funds invest outside the country. For instance, a mutual fund may offer a scheme to investors in India, with an investment objective to invest abroad.

The fund would tie up with a foreign fund (called the host fund). If an Indian mutual fund sees potential in China, it will tie up with a Chinese fund. In India, it will launch a feeder fund in which investors in India will invest. The moneys collected in the fund would be invested in the Chinese host fund. Thus, when the Chinese market does well, the Chinese host fund would do well, and the feeder fund in India will follow suit.

The investment could be specific to a country (like the China fund) or diversified across countries. A feeder fund can be aligned to any host fund with any investment objective in any part of the world, subject to legal restrictions of India and the other country.

In such schemes, the local investors invest in rupees for buying the Units. The rupees are converted into foreign currency for investing abroad. They need to be re-converted into rupees when the moneys are to be paid back to the local investors. Since the future foreign currency rates cannot be predicted, there is an element of foreign currency risk and also opportunity.

There are feeder funds with foreign parents including that of, JPMorgan, DSP Blackrock, HSBC, Franklin Templeton in operation. Besides, many other Asset Management Companies (AMCs) have filed the offer documents with Securities & Exchange Board of India (SEBI) and a bigger range of products will be available shortly to the Indian investors.

Birla Sun Life declares dividend, revises exit load

Birla Sun Life MF has announced dividend under the dividend option of Birla Sun Life Advantage Fund, Birla Sun Life Commodity Equities Fund - Global Agri- Retail Plan and Birla Sun Life Commodity Equities Fund - Global Multi Commodity- Retail Plan, on the face value of Rs. 10 per unit. The quantum of dividend will be Rs. 4 per unit, Re.1 per unit and Rs. 0.75 per unit for Birla Sun Life Advantage Fund, Birla Sun Life Commodity Equities Fund - Global Agri- Retail Plan and Birla Sun Life Commodity Equities Fund - Global Multi Commodity - Retail Plan respectively. The record date for all the three aforesaid schemes has been fixed as 25th May 2012.

The Fund has announced to revise exit load structure under Birla Sun Life Short Term Opportunities Fund. Accordingly, an exit load will be 0.50% of applicable NAV for redemption / switch-out of units within 365 days from the date of allotment. The revised structure of exit load will be effective from 25th May 2012.
ICICI Prudential revises minimum investment amount
ICICI Prudential MF has announced to change the minimum investment amount under ICICI Prudential Income Plan-Institutional Option, ICICI Prudential Income Opportunities Fund- Institutional Option, ICICI Prudential Short Term Plan- Institutional Option and ICICI Prudential Long Term Plan-Premium Plus Option, with effect from 23rd May 2012. Accordingly, the revised minimum investment amount for all these schemes will be Rs. 5 crore.

Bharti AXA announces change in fund manager  
Bharti AXA MF has announced to change in fund manager of Bharti AXA Regular Return Fund, with effect from 21st May 2012. Accordingly, Alok Singh, Chief Investment Officer-Fixed Income will be designated as the new fund manager of Bharti AXA Regular Return Fund, in place of Ramesh Rachuri and Gaurav Kapur.

IDFC announces dividend, closes IDFC Premier Equity Fund subscription
IDFC Mutual Fund has announced dividend for IDFC Super Saver Income Fund - Medium Term Plan A under its bimonthly dividend option, on the face value of Rs. 10 per unit. The quantum of dividend will be Rs. 0.1681 per unit subject to availability of distributable surplus. The record date for dividend distribution is 28th May 2012.

The Fund announced the closure of subscription under IDFC Premier Equity Fund, effective from 31st May 2012. Accordingly, IDFC Premier Equity Fund shall not be open for lump sum subscription (other than by way of SIP / STP).

Edelweiss declares dividend
Edelweiss MF has announced dividend under Edelweiss Diversified Growth Equity Top 100 Fund – Plan C, on the face value of Rs. 10 per unit. The quantum of dividend for distribution will be Rs. 0.75 per unit as on the record date. The record date for dividend distribution has been fixed as 30th May 2012.

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