NFO review: HDFC Developed World Indexes Fund of Funds
The scheme will be passively managed by investing in units/shares of overseas Index Funds and/or ETFs which in aggregate tracks the MSCI World Index
HDFC AMC is launching its first international Fund – HDFC Developed World Indexes Fund of Funds, the first of its kind that covers ~ 56% of global GDP & ~ 50% of world market cap in one single fund.
India is one of the emerging markets of the world but it still represents a very small percentage of the world’s equity market. This underlines the fact that there are potential opportunities for Indian investors to capture the growth from global markets and various businesses and themes which are not part of Indian Equity markets.
Why outside India
Global investment provides an additional source of return in the investor’s portfolio and offers a greater advantage of diversification across markets and economies beyond domestic frontiers.
The NFO opens on Sep 17 and will close of Oct 01.
About the scheme
The scheme will be passively managed by investing in units/shares of overseas Index Funds and/or ETFs which in aggregate tracks the MSCI World Index.
HDFC Developed World Indexes Fund of Funds invests in Credit Suisse Index Funds and ETFs.
As the name suggests there are 3 components to the offering:
1. Firstly it is Fund of Fund Scheme, so it is going to invest in funds and not invest directly in equities.
2. Secondly, the underlying funds are Index Funds/ ETFs and hence passive investing and not active investing.
3. Lastly, the investment universe for such Index Funds/ ETFs is countries forming part of developed markets and hence emerging/ frontier countries are excluded.
About the Benchmark – MSCI World Index
The MSCI World Index is a broad global equity index that represents large and mid-cap equity performance across all 23 developed markets countries. It covers approximately 85% of the free float-adjusted market capitalization in each country.
Do note that MSCI World Index (NR USD) has lower volatility than NIFTY 50 (TRI USD) across times frames.HDFC Developed World Indexes FoF USP
* Access to 5 regions and 23 countries forming part of Developed Markets
* Opportunity to participate in the Developed Market growth with investment in 1500+ heavyweights
* Low correlation with domestic market
* Exclusive global themes
* Hedge against currency depreciation.