NFO Update: US Equity Fund of Funds
IDFC Mutual Fund, one of the top ten asset managers in India by asset under management (AUM) with a quarterly asset average AUM of Rs 1.26 lakh crore at the end of June 2021 announced the launch of its first international FoF, ‘IDFC US Equity Fund of Funds’. This is an open-ended scheme that will have the underlying of JP Morgan US Growth Fund, iShares Russell 1000 Growth ETF and Vanguard Russell 1000 Growth ETF.
The new fund offer (NFO) will open for subscription on July 29 and would go until August 12. Investors can invest under the scheme during the NFO period with a minimum investment of Rs 5,000 and in multiples of Re 1, thereafter. The underlying fund is benchmarked to Russell 1000 Growth Index.
Objective: The investment objective of the scheme is to generate long-term capital appreciation by investing in units of overseas mutual fund scheme or exchange-traded fund investing in US equity securities.
Strategy: Since this is a fund of fund, it will have a passive style of investing and predominantly invest in units of JP Morgan US Growth Fund.
JP Morgan US Growth Fund uses a fundamental, bottom-up stock selection process and targets companies with strong fundamentals that have the ability to deliver higher earnings growth than market expectations. JP Morgan US Growth Fund has a 60-90 stock portfolio, large-cap focussed with some mid-cap exposure with USD 1.8 billion in assets as of June 2021. The fund has a global exposure while 40 per cent of the revenue of the underlying stocks is contributed by countries outside the US.
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Annualised returns of the underlying fund (Rs)
(As On May 31,2021)
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One-year
(per cent)
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Three years (per cent)
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Five years (per cent)
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JPM US Growth Fund
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40.50
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30.30
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28.50
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Russell 1000 Growth Index (Underlying)
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33.90
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25.60
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23.50
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The rest of the two ETFs track the investment results of Russell 1000® Growth Index, which measures the performance of large and mid-capitalisation growth sectors of the US equity market, as defined by FTSE Russell.
Fund manager: The fund will be managed by Viraj Kulkarni, Associate Vice Management – Equity Fund Management and Harshal Joshi, Vice President - Fund Management
Our view: This fund is only for those, who want to diversify their portfolio internationally. Comparing the underlying’s return with the current international fund available in India with US stocks as underlying; the fund has generated better returns.