Mutual fund schemes investing overseas have turned out to be one of the biggest wealth destructor leading to an erosion of 21-40 percent of investors’ wealth from their peak and 24-38 per cent in last one year, reported Business Line.
With easy money fast disappearing, global markets are crashing on concerns over economic growth, leaving investors in the lurch.
Braveheart investors, who want to average out their investments by buying more into these funds at a lower valuation, could not do, as the Association of Mutual Funds in India has capped individual mutual funds investment limit at February level. Dow, Nasdaq slump Invesco Global Consumer Trends and PGIM Emerging Market Equity crashed 42 per cent and 34 per cent in the last one year.
Both these funds have assets under management (AUM) of ₹463 crore and Rs150 crore as of Monday. Edelweiss US Technology Equity, with AUM of ₹1,582 crore, was down 25 per cent, while Kotak Global Innovation Fund dipped 35 per cent in the last one year.
The Dow Jones Industrial Average (DJIA) tumbled 17 per cent from its recordhigh. The Nasdaq Composite tumbled over 33 per cent from its peak.
Pankaj Shreshta, Head Investment Advisory Division, Prabhudas Lilladher, said volatility is part of equity investments and in the current scenario investors should consider staggered equity investment over the next six to nine months.
The RBI and SEBI should consider increasing the overall investment cap, as global markets have corrected significantly and investors should have the opportunity to buy or average their US equity investments at a lower price, he said.
Atanuu Agarrwal, cofounder, Upside AI, said since the option to invest in the US through MF is not available due to threshold limits, investors would be betterplaced by buying into an index ETF or a professionally managed fund through the LRS route.