Srikanth Matrubai is known as the WEALTH ARCHITECT. He is practitioner of Wealthy Habits and author of Amazon Best Selling Book DON'T RETIRE RICH.
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Saturday, November 29, 2014
REVIEW OF SUNDARAM WORLD BRAND FUND
Sundaram Mutual Fund has come out with a very interesting NFO Sundaram World Brand Fund. Read on.
THE ISSUE DETAILS
The Fund has 2 options, option 1 with a 3 years Close ended and Option 2 with a 5 year Closed Ended.
Sundaram World Brand Fund aims to invest 65% to 100%
of Assets under Management in Equities listed overseas. The Fund will
invest in Top Global Brands across Countries.
The NFO is now open and closes on December 2. It will
invest in equities of world's strong brands. They will be advised by
Sundaram AMC, Singapore in picking up the portfolio.
The Fund will be benchmarked against MSCI ACWI Index.
The Fund proposes to Declare Dividends as and when the Funds NAV crosses between Rs.12 to Rs.16.
Since almost Top Global Brands are retail oriented, the Fund will be a kind of Global Retail Proxy Investment.
Sundaram claims there have been studies indicating
that companies having a strong brand value or brand pull have
consistently delivered better returns. In fact, their Back Testing has
shown that if you held a portfolio of global brands for a period of 5
years, in 95% of all occasions, you made a positive return irrespective
of whether you got in during a bull or a bear market. And also the Fund
would have beaten Nifty by a handsome margin of 7%.
Sundaram AMC claims that inspite of high valuations
previous research has proved that Companies with High Brand Recognition
tend to do well in long periods.
WHY YOU SHOULD INVEST IN THIS FUND
Currently exposure to Top Global brands like Apple,
Nestle, Citi, Sony is currently unavailable to Indian Investors and this
Fund gives an opportunity to own these aspirational brands.
Indian Markets are at slightly stretched valuations.
Sundaram World Brand Fund is comparatively less risky
than other International funds as this fund does not have a Region
Specific or Currency specific risk.
Since the fund invests in stocks across a wide
spectrum of sectors, geography, currency, the fund should do well in all
kinds of markets - be it bull or bear market.
WHY NOT TO INVEST IN THIS FUND
This fund will be treated as Debt fund and will be
taxed accordingly. Since the fund is Close Ended, there is a risk of
Market timing and also you will not be able to average your investment
Though the Fund will invest in companies that are
spread across geographies and Currency risk is largely mitigated. Still
the Rupee is expected to appreciate strongly going forward which may
limit the gains made by the Fund.
Investors are always advised to have a portion of
their money in International funds. If your portfolio is short of
international equity exposure, then yes, you can go ahead with this
fund. But, if you are new to Investments, then you are better off
sticking to the Boring Diversified Indian Equity Funds.
If you still feel that you need an international
equity exposure, I would recommend you seriously look at DSP BLACKROCK
GLOBAL ALLOCATION FUND and L&T GLOBAL REAL ASSETS FUND.
Since, Sundaram is intending another 3-4 series in
the same pattern of portfolio in the coming quarters, you can stagger
your investments too by investing a portion of funds in this fund and
the balance in the coming series.
The review was published in https://www.advisorkhoj.com/news/Mutual-Fund/SUNDARAM-WORLD-BRAND-FUND-NFO:-ASPIRATIONAL#.VHl-WMnPvmw