International or global funds have continued to underperform their domestic diversified peers across timeframes.
Gold, commodities, real-estate and sectors where there are limited opportunities to invest in India — these are some themes that international funds sport. In the past, a depreciating rupee against the dollar helped these funds deliver well. But a stable or improving domestic currency over the past one year has meant reduced returns.
Among the 31 global funds, only 15 funds have a five-year track record. Birla Sun Life Global Real Estate, formerly known as ING Global Real Estate, has topped the table by delivering an annual return of 14 per cent over the past five years. Over a one-year period, the funds have gained only 10 per cent.
The funds investing in gold mining stocks have been consistent underperformers. Schemes such has Kotak World Gold Fund-Standard Plan, DSP BR World Mining and DSP BR World Gold have fallen 7 per cent, 7.7 per cent and 8 per cent, respectively, over the past five years.
The gold spot has plunged 39.5 per cent since recording its new high at $1,920 per ounce in September 2011. There are no signs of revival in the yellow metal. The strengthening dollar has added to pressure on this metal and also on other commodities.
Light crude prices have fallen off from their highs of $110 per barrel. In late 2014, it turned bearish as have several other commodities.
Most commodities slumped to multi-year lows and funds which invested in countries such as Latin America and Brazil suffered.
Agri commodities down
Agriculture funds too fared poorly over the past one year as many agri commodities such as corn, wheat, sugar and cotton have been trending downwards and registered multi-year lows in recent times. JPMorgan US Value Equity Offshore, Kotak US Equity and Franklin India Feeder - Franklin U.S. Opportunites have given returns of 13 per cent, 12.3 per cent and 11 per cent, respectively, over the past one year as US markets zoomed to new highs on the back of economic revival there.
Franklin India Feeder - Franklin U.S. Opportunities has delivered a healthy 23.4 per cent annually over the past three years.
Funds such as Birla Sun Life Global Commodities, DSP BR World Gold, Kotak World Gold, DSP BR World Mining, Birla Sun Life Latin America Equity and HSBC Brazil remain at the bottom of the pile.