Investors who bet on international funds last September are sitting on good returns now, helped by the favourable rupee as also the revival of equity markets in the developed world.
The rupee has depreciated 7.6 per cent against the dollar over this nine-month period and, at 56.3 to a dollar now, is at a eleven-month low.
Recovery hopes
DSPBR US Flexible Equity, FT India Feeder Franklin US Opportunities, ICICI Prudential US Bluechip Equity, Birla Sun Life International Equity are some funds that have delivered a 20 per cent return since September 2012.
In contrast, even the top-performing domestic equity large-cap funds have delivered only 7-9 per cent. India’s bellwether Sensex has risen only six per cent in this period.
Buoyed by the hope of economic recovery in the US gathering pace, the Dow Jones Industrial Average has gained 11.8 per cent since September. The MSCI World Index, presenting equities across regions, is up 12 per cent. The choice of international fund has, however, been crucial in deciding returns for the investor. Those who invested in global gold mining funds may be bitterly disappointed.
And if others put their faith in emerging market funds, these too may have under-performed.
DSPBR World Gold and PineBridge WorldGold (earlier AIG World Gold fund) that invest in gold mining stocks have seen their NAVs drop by over 35 per cent in this period.
The fall in gold prices (down 20 per cent since September), coupled with the rising cost of mining on higher energy and labour costs, put gold mining stocks at a disadvantage.
GoldCorp, a leading gold miner, for instance, reported a 35 per cent drop in earnings for the January-March 2013 quarter over the same period the previous year.
Emerging markets
Some funds focused on emerging markets, such as ING Latin America Equity, HSBC Brazil, HSBC Emerging Markets, JP Morgan Mid-East and African Equity Offshore, have also lagged behind, with a return range of 2-8 per cent only.
The MSCI EM index hasn’t changed much in this period.