Overseas funds

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: You may understand it as opportunities, which are perceived to be promising and one of the few penultimate ones or another attempt at gaining gains. More than 15 mutual funds have a focus on overseas markets, foresee an imminent launch and more than 10 have already been launched. As an investor, you could read two important signals into this. First, fund houses, having conducted adequate research on their part, are exploring investment options overseas, as opportunities back home appear slim. Second, is it the right time you should subscribe to these about-to-be-launched and launched funds?

In both cases, what comes across as a crucial question is the focus, reach and the lucrative element in these funds and as these funds take exposure to different countries, how lucrative are those countries as investment options, difference between already-launched funds and the to-be-launched ones, the performance of already-launched funds and lastly, what points you need to bear in mind while investing in these funds. Here is an analysis of all these parameters, which would facilitate your decision-making process involved in the investment.

The adjustments

Of the 12 overseas-focussed funds launched, six were launched after December 2007. This indicates the timely adaptability shown by fund houses in terms of parking investors' money (overseas) as the markets nosedive began to gain momentum in December 2007. It would be safe to assume that the think-tank of fund houses foresaw the decline and they brought in funds that would focus overseas. Hence, you need to take into account the situation in the domestic markets and 'why and when is the fund focussed on a particular country.'

An analysis of returns generated by the launched-overseas-focussed funds in relation to the Sensex gives a perspective about the performance of the launched-overseas-focussed funds. If you plan to invest in overseas-focussed funds for diversification, an analysis into the performance suggests that these funds have performed more or less in line with the Sensex. However, a comparison within the funds gives a telling picture.