Name of new fund offer
DWS Global Agribusiness Offshore Fund of Deutsche Asset Management (India) Pvt. Ltd.
What is it about?
It will invest significantly in the fund’s international scheme, DWS Invest Global Agribusiness Fund (DIGAF), that invests in agriculture and related stocks across the globe.
Rising food prices and depletion of agricultural land pose opportunities for companies in areas such as harvesting, fertilizers and agrochemicals. Companies concerned with food distribution and food processing have opportunities, too. Since agriculture reforms in India have been slow, the fund diversifies across the world.
How much money you make is what matters the most. DIGAF’s (the international fund) returns have been modest compared with most Indian funds. In the past three years, the fund has returned 1.84%. Remember, this fund invests globally and, hence, is susceptible to changes in the global markets. Since the fund invests its entire corpus in the international fund, investments in the new fund will be taxed like a debt fund.
MONEY MATTERS TAKE
There is money to be made in agriculture but much of it depends on the subsidies that governments dole out. In other words, agribusiness depends a lot on political will. Also, the fund aims to invest in several sub-themes connected to agriculture. So, its success will depend on its ability to pick the ones that make money at that time. Unless you are willing to take this risk, stay away till the fund builds a long term track record.