Many investors want their investment portfolio to be more diverse, so they are looking into international funds that include exposure to foreign equities as an asset class to benefit from geographical diversification.
International funds provide investors with several opportunities to invest in new age industries and innovative companies that are backed by technological advancements and adapting to the change. Indian markets have low correlation with international markets and such overseas funds enable domestic investors to diversify their portfolio by investing in international markets.
With the second wave of COVID-19 derailing Indian economy, global diversification could be advantageous for investors in this period of uncertainty in domestic markets. You can invest in well-established companies in economies that are likely to overcome this pandemic scenario sooner than India.
You see, various international funds offer passive investment strategy to provide domestic investors an opportunity to benefit from growth in overseas market. Moreover, due to high volatility that the Indian equity markets is facing it may underperform overseas market. But if you diversify across geographies, you may be able to take advantage of growth in other markets.
Axis Mutual Fund has launched Axis Global Innovation Fund of Fund; it is an open-ended fund of fund scheme investing in Schroder International Selection Fund Global Disruption.
On the launch of this fund Mr Chandresh Kumar Nigam MD and CEO of Axis Asset Management Company Ltd. said, “We have successfully been at the forefront of developing product innovations and creating diversified solutions that offer long-term wealth creation options for our investors. 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. Companies that are bringing about and benefiting from these changes have the potential to generate high growth. The Schroders fund can scout for such companies on a global basis, giving us access to the best such ideas from around the world.”
In addition to that, Mr Alex Tedder CIO, Head of Global and Thematic Equities at Schroders Investment Management said, “With our goals completely aligned with Axis MF, we wish to provide investors in India with best in class global products and Axis Global Innovation Fund of Fund is an important part of that objective.”
Table 1: Details of Axis Global Innovation Fund of Fund
|Type||An open-ended fund of fund scheme investing in Schroder International Selection Fund Global Disruption.||Category||Fund of Fund (Overseas)|
|Investment Objective||The primary investment objective of the Scheme is to provide long term capital appreciation by predominantly investing in units of Schroder International Selection Fund Global Disruption, an equity fund that aims to provide capital growth by investing companies worldwide which benefit from disruption and to invest a part of corpus in debt, money market instruments and / or units of liquid schemes in order to meet liquidity requirements from time to time. However, there can be no assurance that the investment objective of the Scheme will be achieved.|
|Min. Investment||Rs 5000/- and in multiples of Re 1/- thereafter. Additional Purchase Rs 100/- and in multiples of Re 1/- thereafter.||Face Value||Rs 10/- per unit|
|Entry Load||Not Applicable||Exit Load||
||Benchmark Index||MSCI AC World (Net TR)|
|Issue Opens:||May 10, 2021||Issue Closes:||May 21, 2021|
(Source: Scheme Information Document)
What will be the Investment Strategy for Axis Global Innovation Fund of Fund?
This scheme will predominantly invest in units of Schroder International Selection Fund Global Disruption to achieve the investment objective of generating long-term capital appreciation.
The underlying scheme is an equity fund that aims to provide capital growth by investing in companies worldwide, which benefit from disruption and to invest a part of corpus in debt, money market instruments and / or units of liquid schemes to meet liquidity requirements from time to time.
Disruption typically means innovation (whether due to technology or otherwise) which changes a particular industry by creating new markets, products or service models. The manager of the underlying scheme believes that companies benefitting from disruptive innovation, either as the disruptor or otherwise, can experience a rapid acceleration in, and durability of growth.
The underlying scheme i.e. Schroder International Selection Fund Global Disruption is actively managed with a diversified approach across nine disruption themes globally such as; environment, automation, fintech, healthcare, communication, food and water, new consumer, E-commerce and digitization.
The following is list of Top 10 holdings and sector of underlying scheme by their weightage as of March 2021.
(Source: Scheme Information Document)
The Axis Global Innovation FoF will follow passive investment strategy for investments in overseas mutual fund and the scheme will endeavour to generate capital appreciation with global investing.
About the benchmark
MSCI ACWI Index is MSCI’s flagship global equity index, designed to represent performance of the full opportunity set of large- and mid-cap stocks across 23 developed and 27 emerging markets. As of November 2020, it covers more than 3,000 constituents across 11 sectors and approximately 85% of the free float-adjusted market capitalization in each market.
Being a Fund of Fund, the scheme will invest 95% of its assets in units / shares of Schroder International Selection Fund Global Disruption; it will also invest up to 5% of its assets in Debt, Money market instruments and / or units of liquid schemes in order to meet the liquidity requirement of the scheme.
Under normal circumstances, asset allocation will be as under:
Table 2: Asset Allocation of Axis Global Innovation Fund of Fund
|Instruments||Indicative Allocation (% of assets)||Risk Profile|
|Units / shares of Schroder International Selection Fund Global Disruption||95||100||Medium to High|
|Debt, Money market instruments and / or units of liquid schemes||0||5||Low to Medium|
(Source: Scheme Information Document)
Who will manage Axis Global Innovation Fund of Fund?
Mr Hitesh Das and Mr R. Sivakumar will be the dedicated fund managers for this scheme.
Mr Hitesh Das is Equity Research Analyst at Axis Mutual Fund and has over 10 years of experience in financial services. Prior to this, he was associated with Barclays Securities India Pvt. Ltd. as Equity Research Analyst, Credit Suisse Securities (India) Pvt. Ltd. as Equity Research Analyst, Ebusinessware (India) Pvt. Ltd. as Equity Research Analyst and Yes Bank as Risk Analyst.
His qualifications include B.Tech, M.Tech and PGDM and currently other schemes under his management are; Axis Growth Opportunities Fund, Axis ESG Equity Fund, Axis Global Equity Alpha Fund of Fund, Axis Special Situations Fund, Axis Bluechip Fund, Axis Midcap Fund, Axis Flexicap Fund and Axis Focused 25 Fund.
Mr R. Sivakumar is Head – Fixed Income & Products at Axis Asset Management Company Ltd. and has over 20 years of experience in financial services industry. Prior to this, he was working with Axis Asset Management Co. Ltd. as Fund Manager – PMS, Fortis Investment Management (India) Pvt. Ltd. as Chief Operating Officer, Sundaram Asset Management Company Ltd. as Fund Manager – Fixed Income, Zurich Asset Management (India) Private Ltd. as Research Analyst.
Mr R. Sivakumar is Bachelor of Technology, IIT, Madras and PGDM, IIM, Ahmedabad. Currently, other schemes managed by him are; Axis Dynamic Bond Fund, Axis Capital Protection Oriented Fund – Sr. 5, Axis Children’s Gift Fund, Axis Triple Advantage Fund, Axis Dynamic Equity Fund, Axis Equity Saver Fund, Axis Equity Hybrid Fund, Axis Retirement Savings Fund (Plan – Aggressive, Conservative and Dynamic), Axis All Seasons Debt Fund of Fund and Axis Global Equity Alpha Fund of Fund.
Fund Outlook – Axis Global Innovation Fund of Fund
Global investing diversifies the investment portfolio for investors and has the potential to improve risk-adjusted returns. Disruption is everywhere, Technology/innovation has resulted in significant opportunities for investors, and much of the innovation in India is in the unlisted space.
Axis Global Innovation FoF aims to provide Indian investors with an opportunity to invest in Schroder International Selection Fund (SISF) Global Disruption, a global equity fund that aims to target opportunities across the world. Global investing will allow investors to capture disruptive growth through various themes via Mutual Fund route, many of which are not available on the listed markets in India.
The scheme will be passively investing in units of underlying fund and offer you international allocation and diversification which will enhance your investment portfolio. It will enable access to unique propositions globally that are unavailable in the domestic markets
The underlying scheme seeks to provide capital growth through investments in companies that are innovative and are successfully adapting to the changing requirements. The performance of Axis Global Innovation FoF will depend on the performance of the underlying fund and generate returns nearly in line with that of underlying fund.
However, investing in overseas fund of fund has few risks involved that you should understand thoroughly to make informed investment decision. The geo-political and social situation of the countries this fund is investing, currency risk, etc. that may affect the fund performance and this makes it a risky proposition.
If you are considering to have international allocation and invest in Axis Global Innovation FoF, ensure you hold a high-risk appetite, long investment horizon and your investment objectives align with the fund.
This article first appeared on PersonalFN here