- May 2014
- December 2013
Ruby Jacob, 23 Jun 2012
Newness fascinates us all. But when it comes to personal finances, it is prudent to go with the tried and tested ones. ICICI Prudential US Bluechip Equity Fund's new fund offer is open from 18 June to 02 July. This is a first-of-its-kind mutual fund in India. It offers investors sitting in India the opportunity to invest their money in some of their dream American companies listed on NYSE and Nasdaq. Till date we have had passively managed funds- mostly fund of funds- that gave exposure to equities of other countries. ICICI Prudential US Bluechip Equity Fund is the first actively managed fund to invest directly in US stocks.
At first glance the NFO's presentation available at http://www.icicipruamc.com/download/NFO/ICICI-Prudential-US-Bluechip-Equity-Fund-Presentation-Web.pdf might give you rather compelling reasons to believe this is a great fund to add your mutual funds kit. The gist of benefits as detailed in the presentation is 1. Diversification through investing in a low correlated market, 2. Exposure to global currency, 3. Benefit of investing in global brands and in sectors closed to investors in India, 4. Participate in the giant American economy's performance. However the question is whether these really matter to retail investors in India.
Indian and US markets have very low correlation, which in loose terms means the level of performance of one is very different from the other. India is among the bunch of most preferred investment destinations for international investors. S&P 500's returns on the last decade are approximately 7% as compared to Sensex returns of 17% in the same period. Many blue chip companies from India are MNCs. Currency markets are extremely volatile for retail investors to be exposed to. The benefit of exposure to dollar currency is the catch here. If rupee depreciates further in the long term, that alone would bring in returns even if US markets did not perform. This would turn out to be a losing proposition if US markets' performance does not better Indian market's and the rupee appreciates.
In conclusion, investing in a good large cap diversified fund will give Indian retail investors the diversification they need. They can skip the NFO for now. HNIs who seek additional diversification can go in for the fund if they hold the view of rupee depreciation in the long term.