SBI Mutual Fund is launching its first international fund offering on March 1, 2021. The country’s largest fund house’s new fund offer is called SBI International Access – US Equity FoF. The fund of fund will invest in its joint venture partner Amundi Funds’ US Pioneer Fund (domiciled in Luxembourg), which invests predominantly in US market securities. Let’s find out more details about the product.
About the new FoF
Investors putting money in SBI International Access – US Equity FoF will see the funds being fed into the Amundi Funds – US Pioneer Fund which is domiciled in Luxembourg.
According to a presentation from SBI MF, the underlying fund has delivered returns of 16.27 per cent (CAGR) in euro terms, beating its benchmark S&P 500 Index return of 16.16 per cent (as of 31st January 2021). The underlying fund has a size of $2.5 billion.
SBI International Access FoF may also invest in other mutual funds/ ETFs domiciled overseas and invest predominantly in US markets. The scheme will be benchmarked to the S&P 500 index after converting it to Indian Rupee.
The advantages of investing outside India includes international diversification, lower correlation and currency depreciation. Also, the new fund is supposed to be a US concentrated fund with some bias for value.
The minimum investment will be Rs 5,000. The fund manager is Mohit Jain.
About the underlying Amundi fund
Amundi Funds – US Pioneer Fund is the underlying main scheme. It seeks out high-quality, attractively priced companies trading at below their intrinsic value.
The underlying fund’s top five sectors by exposure are Technology, Financial Services, Consumer Cyclicals, Industrials and Healthcare.
In terms of top stock holdings, the fund’s five biggest are Apple, Amazon, Visa, Microsoft and Alphabet (Google parent).
How is SBI International Access – US Equity FoF different
SBI International Access – US Equity FoF is the fund overseas fund of funds in SBI MF. This is more of a passive investment option.
Some of SBI MF’s domestic schemes such as SBI Focused Equity already invest a part of their portfolio in international stocks. But, that’s a small exposure compared up to 100 per cent allocation in the new fund.
SBI MF also offers an indirect way linked to overseas companies. This is done by SBI Magnum Global Fund which does active management of investments in diversified portfolio comprising primarily of MNC companies. MNCs are all globally controlled.
Watch out for
The funds and schemes that FoFs invest in have their own expense ratios. Combine it with the expense ratio of the FoF, and you are looking at an expense ratio that is higher than standard expense ratios of equity schemes.
FoFs are for long term. So, consider investing if you have at least 5 years. Also, FoFs should be part of your satellite allocation.
