Currently, Indian mutual funds have a total exposure of roughly Rs 30,000 crore to international stocks of which little over a third is geography focussed like say China, US, or Brazil. An equal amount is a theme focussed like technology or innovation and whatever is left would be on gold or gold mining and the likes.
But, till now, we never had a single fund that would look at the developed market space as a whole. HDFC has a new fund offer (NFO) ongoing and normally we don't cover NFOs on the show unless there is some very compelling reason.
CNBC-TV18’s Sumaira Abidi spoke to Vishal Dhawan, founder and CEO of Plan Ahead Wealth Advisors to talk about why an Indian investor should consider investing in the developed market.
Dhawan said, "When the tapering tantrum took place in 2013, there was a clear outperformance of developed markets vis-à-vis India or actually all emerging markets. So just to put the numbers into perspective, developed markets on average, did about 30 percent in the calendar year 2013. In contrast, if you looked at emerging markets, they were marginally negative. If you look at India, it was a little positive in rupee terms, but it was negative in dollar terms."
"So I think if we are getting into a cycle where there is potentially a tapering event that might happen, at some point soon, I think it is important for investors to keep that in mind, number one. Number two is the fact that volatility in developed markets tends to be lower than in emerging markets. In countries like India, therefore, if you want a less volatile portfolio, you would want to look at developed markets very closely. Thirdly, the stimulus that has been given to various economies in light of COVID-19 is much greater in the developed world as compared to the emerging markets and therefore, this in our view is a strong reason why developed market exposure needs to be along with India exposure in client portfolios," he said.
Also in the show, Anand Dalmia, co-founder and chief business officer of Fisdom answered the viewers’ mutual fund queries.
For full interview, watch the accompanying video...