Axis Mutual Fund has launched a Greater China Equity Fund of Fund following strong returns delivered by Edelweiss Greater China Equity Offshore Fund, the only other Indian mutual fund focused on China.
The Edelweiss Fund, with a size of ₹762 crore, has delivered a return of 84% in rupee terms over the past year, vastly outstripping the 28% delivered by the S&P BSE 500 Total Returns Index (TRI). Its 10 year return stands at 16.73% CAGR, also higher than the 12% delivered by the S&P BSE 500 TRI. Axis Mutual Fund has a tie up with Schroders Asset Management, a global asset manager and the new fund will feed into Schroders International Selection Fund - Greater China.
Also Read | The health nudge is merely a mirage
The underlying Schroders fund, domiciled in Luxembourg, was launched in 2002. It focuses on stock markets in mainland China, Hong Kong and Taiwan. It has delivered a CAGR of around 9.8% in US dollar terms over the past 10 years. In calendar year 2020, it is up 43% in dollar terms. Its top three holdings are Taiwan Semiconductor Manufacturing Company, Alibaba Ground Holding Ltd and Tencent Holdings Ltd.
"We believe international investing is an important part of an investor's portfolio, and emerging markets, particularly China, present an interesting investment opportunity. In the post COVID world, this is an economy rebounding quickly from crisis with opportunities in tech, financials and consumptions," said Radhika Gupta, CEO, Edelweiss Mutual Fund.
Some investment professionals, however, continue to favour US stocks for global diversification. "Investors can allocate 10-15% of their portfolio in international funds. However within this basket, I prefer the US market over China. The former has the world's most innovative companies and is much less correlated with India than China is," said Amol Joshi, founder, Plan Rupee Investment Services, a Mumbai based mutual fund distributor.
