What’s should be your strategy for primary market in FY25?
How many companies can have IPO in the financial year 2024-25? How much money can companies raise from the primary market in FY25? What should be the strategy in primary market in FY25?
Indians are increasingly investing aboard as the assets under management (AUM) for overseas schemes more than tripled from Rs 2,595 crores in January 2020 to Rs 10,889 crores in January 2021. Not only did the AUM tripled even the number of folios have more than tripled from 1.6 lakh to 5.6 lakh folios during the same period.
D. P. Singh, Chief Business Officer of SBI Mutual Fund said, “new generation people are global citizens, and they don’t want to limit their investment horizon only to India. They want to take a plunge into other geographies also and the US, in any case, is the first choice. Most of the folios are created by fintech companies.”
SBI Mutual Fund, India’s largest fund house by assets, has launched its first international product ‘SBI International Access – US Equity FoF’. The open-ended fund of funds scheme will invest in mutual fund scheme/ETFs that invest in US markets and through Amundi Funds – US Pioneer Fund.
“As the largest fund house, we want to give our investors an option to diversify globally. The first & natural choice is to start with the US. Going ahead SBI MF will be launching more international funds,” added Singh.
The Amundi Funds is domiciled in Luxembourg, has delivered returns of 16.27% (CAGR) in euro terms over 5 years period, beating its benchmark S&P 500 Index return of 16.16% (as of 31st January 2021) as per the SBI MF presentation. The underlying fund has a size of $2.5 billion.
The minimum investment required is Rs 5,000 and in multiples of Re. 1/- thereafter. The expense ratio of the underlying fund as well as the feeder fund combined is capped at 2.25 per cent per annum under SEBI rules. The new fund offer (NFO) starts today 1st March 2021 and closes on 15th March 2021.
IT is the largest sector in the underlying fund with a weight of 37.3%, followed by consumer discretionary stocks at 15%. The five largest holdings are Microsoft, Apple, Alphabet, Amazon and Visa (as of 31 January).
Harshvardhan Roongta, Principal Financial Planner of Roongta Securities believes that in the developed markets over the long term (10 years) very less number of actively managed funds were able to beat the index. In the short term (1-5 years) actively managed funds were able to beat the S&P500.
“Investing in an index fund of S&P 500 or Nasdaq100 a better option compared to investing in an actively managed fund in a matured developed market like the US,” said Roongta.
Returns of international mutual funds can further improve as Rupee depreciates against the US dollar. SBI MF in its presentation also highlighted that Indian Rupee depreciated by 3.29% against the US dollar on average annually (a rolling 3-year CAGR basis).