International funds have a field day:: Business Line

While domestic diversified equity funds lost sheen in the market gyrations of the last one year, international funds gained handsomely. As a category, the latter have managed about 13 per cent returns during this period. This is much higher than the Sensex and the Nifty returns of around 5-6 per cent, too.

RUPEE DEPRECIATION AIDS

The top performers, both over six-month and one-year period, come from different walks — global funds, exchange-traded funds (ETFs) and theme funds. A common reason for their performance is the appreciation of the US dollar against the rupee. From 45 to a dollar in mid-August 2011, the rupee has depreciated by over 20 per cent, to around 55 currently.

The performance of the Nasdaq 100 ETF from Motilal Oswal is a good example of this. While the Nasdaq 100 index (comprising mostly technology stocks) gained about 25 per cent in the last one year, the depreciation of the rupee has helped the fund top the charts with a 52 per cent gain.

The ING Global Real Estate Fund follows with a 36 per cent one-year return. This fund is an open-ended fund-of-funds which indirectly invests in stocks of property developers across the world.

With the whole of Birla Sun Life International Equity - Plan A exposed to global markets, it garnered about 30 per cent returns in the last one year, galloping much faster than Plan B. Plan B, which has only limited foreign exposure (up to 35 per cent), managed only a 7 per cent return. Similarly, a greater exposure to Indian equities also capped the returns of Templeton India Equity Income Fund.

COMMODITY FUNDS DOWN

The unifying link for the underperformers, both over six months and one year, was the commodity theme. While gold has appreciated in rupee terms by about 15 per cent in the last one year, it has depreciated by about 10 per cent in US dollar terms. The AIG and DSP BR World Gold funds lost 12 and 8 per cent respectively in the last one year as the underlying equities did not perform too well. With other metals and commodities too cooling off, funds such as Mirae Asset Global Commodity Stock and ING Global Commodities were pushed towards the bottom of the ladder in the international category. The agriculture theme, though, seems to have worked better among commodities. The DWS Global Agribusiness Offshore falls in the top five both over six-month and one-year period. This fund has benefited from higher exposure to US-based fertiliser and agri-chemical companies such as Mosaic, CF Industries and Monsanto, for which export demand remained strong.

LATAM FUNDS WORSEN

Two funds that performed poorly over the last six months are the ING Latin America Equity Fund and the HSBC Brazil Fund. The former, for example, sports 12 per cent returns for a one-year period, while over six months it lost 3 per cent. Its benchmark, the MSCI EM Latin Index, has lost about 14 per cent since mid-February.

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