Investment opportunities in US equities

A lot of gung-ho has been witnessed among the investor’s community after Sundar Pichai – the Chief Executive Officer of Google unveiled Google Duplex – its new AI-based assistant. A similar excitement was witnessed when ace investor Warren Buffet added 75 million shares of Apple to his kitty after offloading complete stake in IBM Corporation. We believe as technology on the lines of Internet of Things (popularly known as IOT), artificial intelligence, big data, and automation will find increased adaptation, technology giants to the likes of the Google, Amazon, Apple will continue to grow at a rapid pace while creating shareholder’s wealth at a similar pace.

Thus, it could be a good opportunity for retail investors to invest in such companies and take the exciting ride into the future. Let us look it from a more personal angle, the products of these companies such as the phones, laptops, etc. are truly remarkable and we are sure that many of you would have fallen in love with these already. It is thus obvious to also participate in the growth of these companies. In this article, we seek to capture the funds that provide you with an opportunity to invest in such companies so that you can be a part of the growth driver of the future.

We scouted for few funds that invest in such companies. Following, are the funds, offered by different fund houses which provides you with an opportunity to invest:

Fund 1 – Reliance US Equity Opportunities Fund

The fund seeks to provide long-term capital appreciation by investing in equity and equity related instruments of the companies that are listed on recognized stock exchanges in the US and the remaining in debt and money market securities in India

Fund performance

Performance1-M3-M6-M1-Y
Absolute returns (%)9.29.7111.8123.4
Benchmark (%)1.1323.4711.59

Source: ValueResearch Online; As of May, 11 2018; Category: Equity:  International

Fund composition

Top 10 Companies (%)59.00Mastercard Inc.10.76
Top 5 Sectors (%)77.75Booking Holdings Inc.7.96
Large Cap (%) 96.80Alphabet Inc.6.59
AUM (Rs. Cr)14Facebook Inc.5.79
No. of holdings25IQVIA Holdings Inc.5.21

Source: Morningstar, ValueResearch Online; As of May, 11 2018; Category: Equity:  International

Fund review

The fund has generated considerable returns over the past one-year period as a result of strong performance from large-cap companies in the US.

The fund seeks to invest in a portfolio of high-quality stocks that are listed in the stock exchanges of US. With an endeavor to adopt Hare Strategy for investments, the fund manager seeks to invest in stocks of firms that are experiencing rapid growth or possess sustainable competitive advantages. While this brings in higher risk, the return potential is much higher too thereby justifying the investment approach. The investment philosophy remains a blend of top-down and bottom-up approach without any sector or market capitalization bias and the fund sees investment that is diversified across sectors. Anju Chhejer and Jahnvee Shah ably manage the fund since July 2015.

Some of the other funds that are worth checking in the international equity space are elucidated as under:

Fund NameComments
DSP BlackRock US Flexible Equity FundDSP BlackRock US Flexible Equity Fund    The fund seeks to invest in BlackRock Global Funds US Flexible Equity Fund (BGF – USFEF) with a certain portion invested in marketable securities and/ or money market/ liquid schemes to meet liquidity requirements from time to time. With a track record of over five years, the firm has generated consistent returns. During the past one year, the firm has outperformed its benchmark considerably generating 19.66% returns in absolute terms.
ICICI Prudential US Bluechip Equity Fund

 

The fund seeks to provide long-term capital appreciation to investors by primarily investing in equity and equity-related securities (including ADRs/GDRs issued by Indian and foreign companies) of companies listed on New York Stock Exchange and/or NASDAQ. The fund has consistently generated double-digit returns over the multi-trailing time period and has a considerable track record of over five years. The fund generated 16.2% returns outperforming benchmark during the one-year period ending May 11, 2018.
Kotak US Equity Standard Fund

 

The scheme seeks to provide long-term capital appreciation by investing in units of a fund that invests predominantly in equity and equity-related securities of companies having assets, products or operations in the United States. With over three-year track record, the fund has been able to sustain its returns over the multi-trailing time period. The fund has generated ~20% returns during the one year period ending May 11, 2018.

 To conclude, we believe these international equity funds seek to strengthen your portfolio by investing in an equity market that has low correlation with the Indian market. The funds also provide you with an opportunity to invest in industries and global leaders that may not be present in India. Moreover, we believe The US market remains a very critical component of any broadly diversified asset allocation and these funds allow you to reap in benefits by investing in shares of American companies that is otherwise a very costly affair.

Madhusudhanan Raghunathan
madhur@orowealth.com
1 Comment
  • Vinay Maithani
    Posted at 13:35h, 03 June Reply

    Franklin India Feeder Franklin US Opportunities Fund is much better fund than all of the above in my opinion

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