IDFC Mutual Fund has announced the launch of its first international fund IDFC US Equity Fund of Fund, an open-ended fund of fund scheme investing in units/shares of overseas Mutual Fund Scheme (/s) / Exchange Traded Fund (/s) investing in US Equity securities. The NFO opens for subscription July 29 and closes August 12. Let us find out more about the offering.
About the fund
IDFC US Equity Fund of Fund is designed to offer investors an opportunity to invest in a growth-oriented portfolio of US stocks, thereby benefiting from strong structural opportunities in a resilient US market.
J.P Morgan US Growth Fund, incepted in 2000 and has an AUM of USD1.8 billion as on June 30, 2021, is the actively managed underlying fund. The underlying fund is known for its robust investment framework, a tight-knit portfolio team and a consistent track record. The underlying fund is actively managed with a broad-based, growth-oriented portfolio. The portfolio has a lower concentration among top index constituents and higher portfolio earnings growth.
The New Fund Offer of IDFC US Equity Fund of Fund will open for subscription on Thursday, July 29, 2021 and close on Thursday, August 12, 2021.
Why US equities
The US economy started showing signs of economic revival, supported by the aggressive vaccination rollout, flattening curve of the Covid-19 cases, progression towards herd immunity, reopening of establishments, and fiscal stimulus by the government. These key factors have restored the confidence of investors.
The US market is at the forefront of new-age innovations across different sectors and investors can reap benefit of those unique businesses. Investors can add currency exposure to their portfolio to meet future expenses and participate in innovative themes, which are expected to advance the US economy further. Pent-up demand aided by low debt levels and high net worth is expected to drive GDP growth in the second half of 2021, which is expected to range between 6-7 per cent for CY21, the highest in almost 40 years.
Benefit of FoF
US equities can be an ideal complementary addition to the investorâ€™s portfolio as it has a low correlation with Indian equities, facilitating effective diversification and exposure to USD, which is a key asset.
Higher US equity market performance can be attributed to the superior earnings growth making it a perfect destination for earning attractive returns with low risk.
Investors of IDFC US Equity Fund of Fund can derive value proposition from the growth-oriented underlying fund as it provides a broad exposure to the US equity markets and has been actively managed by a team of prudent fund managers with deep US Understanding and adopting a bottom-up approach to identify ESG compliant companies.
The underlying fund portfolio consists of 60-90 fundamentally strong stocks with 40 per cent of the revenue of the underlying stocks contributed by countries outside the US.
Highlighting the rationale behind launching the IDFC US Equity Funds of Fund and relevance of investing in US equities now, Vishal Kapoor, CEO, IDFC Asset Management Company Limited (AMC) said, â€œIncluding an international fund helps bring a geographical diversification to an investorâ€™s portfolio. However, before selecting an international fund, an investor should check if the fund is complementary.”
IDFC US Equity Fund of Fund provides complementary addition to the investorâ€™s portfolio as it has a low correlation with Indian equities, it offers investors the powerful opportunity of investing in US equities and participation in a significant global revenue pool, Kapoor added.
NFO ideal for whom
If you are an MF investor who wants broad exposure to US equity markets without a sector/market-cap bias, then this is a new fund to consider. The NFO offers a hassle-free investment process into US market; one can subscribe and redeem like a regular Indian mutual fund. Please note the investors’ principal may be at very high risk. This article is not an advice but is only for informational purposes.