If you believe in innovation and don’t want your investment potential to be restricted by geographical boundaries then among a range of investment alternatives — you can also explore DSP Global Innovation Fund of Funds.
This FOF aims to invest in the potential winners of tomorrow — dominators, disruptors and enablers. The fund was launched on Feb 14, 2022.
The fund offers a range of benefits. These include access to innovative companies with accelerated growth potential, and low risk of stock and sector concentration along with good international diversification strategy.
Allocation across stocks and sectors
The key themes under DSP Global innovation fund of fund include semi-conductors with 29 percent weight, software with 24 percent weight, internet and interactive media with a ratio of 11 percent, bio technology and healthcare with a proportion of 6 percent, e-commerce with 7 percent weight, fintech with 6 percent weight, 4 percent in mobility, among others.
The fund aims to strike a fine balance between active and passive funds in the ratio of 7:3. And allocation is meant to be spread across small cap, mid cap and large cap funds with nearly 72 percent allocation in large cap funds, nearly 20 percent in mid-caps and the remaining in small caps.
Range of funds
Since it is fund of funds (FOF), it allocates funds to a raft of funds which are a healthy mix of well-established, enabled and disruptive companies.
These funds include Morgan Stanley US Insight Fund, Nikko AM ARK Disruptive Innovation Fund, Bluebox Global Technology Fund, BGF World Technology, iShares NASDAQ 100 UCITs ETF and iShares Semiconductor ETF.
The fund has a short history of two months. The following tables try to capture their performance during this short period.
Best performance period
| Duration | Return (%) |
| 14 Mar 2022 - 21 Mar-2022 | 9.27 |
| 23 Feb-2022 - 25 Mar-2022 | 8.53 |
Worst Performance period
| Duration | Return (%) |
| 30 Mar-2022 - 06 Apr-2022 | -6.55 |
| 15 Feb-2022 - 17 Mar-2022 | -6.55 |
(Source: Valueresearchonline.com)
Temporary halt in overseas investment
It is important to note that markets regulator SEBI has specified an industry level limit of $7 billion for mutual funds to invest in overseas securities and mutual funds, and a separate limit of $1 billion for investment in overseas Exchange Traded Funds.
On January 23 this year, SEBI advised that DSP Global Innovation Fund of Fund should initially invest only in overseas ETFs since the industry limit of $7 billion has been breached. However, the overseas ETF limit is yet some distance away.
“This is a fund that invests mainly in shares of foreign companies. When you invest for five years or more, you can expect gains that beat the inflation rate as well as returns from fixed income options. But be prepared for ups and downs in your investment value along the way. International equity funds are suitable to invest a part of your money in for diversification,” Value Research says in its analysis on this fund.