As Indian rupee, economy falter, investors look towards US equities

Oct 07 2013, 09:03 IST
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AUM for Franklin Templeton's FT India Feeder Franklin US Opportunities Fund has surged from Rs 220 crore in June to Rs 377 crore by August end. AUM for Franklin Templeton's FT India Feeder Franklin US Opportunities Fund has surged from Rs 220 crore in June to Rs 377 crore by August end.
SummaryBetween June and August, 2013, US-focussed schemes saw their AUM jump by over 70%.

In July 2012, when ICICI Prudential AMC launched its US Bluechip Equity, Nimesh Shah, CEO of the fund house, enthusiastically promoted his scheme across the country, trying to hardsell the advantages of picking up exposure in some of the world’s biggest blue-chip companies. After 30 roadshows during the new fund offer (NFO) period, the fund managed to collect only Rs 57 crore.

“We failed then,” Shah recalls with dismay. What it failed to mobilise at the time of launch, the fund has more than compensated for over the last couple of months, with its assets under management (AUM) surging from Rs 105 crore in June 2013 to Rs 155 crore by August 31, 2013 as the funds have generated superior returns and investors seeing value in diversification with sharp depreciation of rupee.

Others, too, have gained. Franklin Templeton, which launched its FT India Feeder Franklin US Opportunities Fund in January 2012, collected Rs 104 crore during the NFO period, while its AUM surged from Rs 220 crore in June to Rs 377 crore by August end. DSP Blackrock US Flexible fund that was launched in July 2012, had seen AUM surging to Rs 80 crore by August-end, up from Rs 33 crore in June 2013. In aggregate, the three US-focussed schemes saw their AUM jump by over 70 per cent from Rs 358 crore in June 2013 to Rs 610 crore in August 2013.

While the schemes focussing on exposure into US equities recorded a net addition to their AUM between July and August, the overall equity AUM during the month of July witnessed a net outflow of Rs 1,652 crore, primarily on account of redemption pressure. The data for the month of August though was slightly encouraging as there was a net inflow of Rs 467 crore into the equity schemes during the month.

“It’s a new phenomenon and inflows have been good with informed investors moving into this category. While the overall numbers are still small, at a time when other equity funds are witnessing redemption there have been inflows in this category,” said Pankaj Sharma, EVP and head of business development at DSP Blackrock Mutual Fund.

Superior performance

The rise in the AUM of the schemes over the last couple of months clearly reflects that investors are moving towards these schemes and it is not without a reason. Three of these schemes, which were launched in 2012, have generated over 37 per

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