As US markets are witnessing a steep correction, domestic investors keen to invest in the markets overseas can leverage this opportunity to get an exposure to global securities. In 2022, three main indices of Wall Street saw their biggest annual drop since 2008, a Reuters report noted.
It is worth mentioning here that the capital markets regulator, in June 2022, reopened overseas investment by mutual funds not too long after a ban imposed in February 2022. Once the ban was lifted, fund houses opened their schemes for fresh subscription.
In fact, a new fund scheme — Axis Nasdaq 100 FOF — was also launched in November 2022 under this category, raising ₹23 crore in the month of its launch.
|Date||Total AUM of FOFs investing overseas ( ₹crore)|
|Nov 30, 2022||20,863|
|Sep 30, 2022||18,945|
|Jan 30, 2022||22,127|
|Sep 30, 2021||21,126|
|Sep 30 2020||6,496|
|Sep 30, 2019||2,254|
As one can see in the table above, the total assets under management (AUMs) of FOFs investing overseas have fallen since January 2022. The fall is primarily attributed to steep market corrections seen in the recent past in the Wall Street, keeping wary investors at bay.
As one can see in the table below, almost all the fund schemes which invest in overseas stocks posted losses in the past one year. These include Motilal Oswal Nasdaq 100 FOF that declined 24.9 percent in past one year, Franklin India Feeder US Opportunities Fund that fell by 30.2 percent and Kotak Nasdaq 100 FOF that shaved off 26.26 percent of its value in one year.
|Fund of Funds (FOFs) investing overseas||Return (%)||AUM ( ₹crore)|
|Motilal Oswal Nasdaq 100 FOF||-24.94||3,043|
|Franklin India Feeder Franklin US Opportunities||-30.2||2,754|
|Kotak Nasdaq 100 FOF||-26.26%||1,762.82|
|Edelweiss US Technology Equity FoF||-37.4||1,489.63|
|Axis Global Equity Alpha FoF||-7.87||1,042|
|SBI International Access - US Equity FoF||-12.58%||850.47|
|DSP US Flexible Equity||-5.3||726.77|
(Source: Regular one-year returns as on Jan 3, 2023)
There are a few smaller mutual fund schemes with an AUM of lower than ₹400 crore. These include Mirae Asset S&P 500 Top 50 ETF FoF, IDFC US Equity FOF, among others.
|MF schemes investing overseas||Return (%)||AUM (< ₹400 crore)|
|Mirae Asset S&P 500 Top 50 ETF FoF||-16.48%||364.64|
|IDFC US Equity FoF||-17.8%||314.47|
|ICICI Prudential Global Advantage Fund||-9.49%||284.5|
|Aditya Birla Sun Life NASDAQ 100 FOF||-26.46%||130.37|
|Edelweiss US Value Equity Offshore Fund||4.02%||87.81|
When comparing the investment made by different categories of investors, one can discover that the least contribution is made by corporate investors (17 percent) followed by retail investors (25 percent), whereas the maximum contribution (58 percent) was made by high net-worth individuals (HNIs) as on September 30, 2022.
(Note: This story is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment related decision.)