SBI Mutual Fund is launching a New Fund Offer (NFO) which will invest in US equities – SBI INTERNATIONAL ACCESS – US EQUITY FOF. The NFO is a fund of fund (FOF) investing in Amundi Funds – US Pioneer Funds.Amundi is one of the leading Asset Management Companies (AMC) of the world with over $2.1 trillion of assets under management (AUM) as on 31st December 2020.
Why diversify in global equities?
Retail investors have a bias towards domestic equities. However, there are several benefits of investing in global equities:-
- Investing only in domestic equities not only exposes you to single country risk. There is low correlation of returns of different markets. Investing in global equities can diversify risk considerably and bring stability to your portfolio.
- Investing in domestic equities only is also a big opportunity loss in terms of exposure to growth opportunities globally. For example, the market capitalization of US equity market is more than the combined market capitalization of the next 6 countries.
- Global diversification can also give you exposure to global mega-trends or sunrise sectors which are, at this point of time, are not yet available in the Indian stock market. Examples of such global mega-trends are consumer internet (e.g. Google / Alphabet, Facebook etc), e-commerce (e.g. Amazon etc), cash-less payments (e.g. Visa, Mastercard etc).
- Diversification into global equities can result in foreign exchange gains from INR depreciation against USD.
Why invest in US equities?
- Exposure to the largest market in the world: The US market is the largest equity market in the world with a market cap of $40 trillion (source: Bloomberg). US equities represent close to 50% of global equity indices and as such, are the core components of global indices.
- Well diversified market: Top two sectors (Financials and Health Care) account for around 40% of US equity market capitalisation (source: Bloomberg). In contrast the top two sectors in Nifty 50, Financials and IT account for more than 55% of Nifty (source: National Stock Exchange).
- Home to some of the largest global brands: Some of the largest global brands with global customer base, networking effect and competitive advantages are based in the US e.g. Microsoft, Apple, Amazon, Alphabet / Google, Visa etc.
- Resilience of the US economy: Despite macroeconomic challenges, US economy is showing resilience and investors should look at investingin world’s largest market denominated in world's strongest currency.
SBI International Access Equity Fund of NFO
SBI Mutual Fund is launching a New Fund Offer (NFO) for an open ended fund of fund (FOF) scheme which will invest in a mutual fund which in turn invests in US Equities. SBI International Access US Equity Fund of Fund is the name of the scheme.
The NFO opens for subscription on 1st March 2021 and will close on 15th March 2021. The feeder scheme in this FOF is managed by Amundi, a global asset management company (AMC) with $2.1 trillion dollars of assets under management. The underlying fund is Amundi Funds – US Pioneer Fund. The fund is actively managed and has over $2.6 billion of AUM (source: Morningstar), as on 26th February 2021.
Sector allocation and Top 10 Holdings of Amundi Funds – US Pioneer Fund
Source: SBI Mutual Fund
The underlying fund is investing in major technology mega-trends themes
- 5G Wireless: Fifth generation wireless networking architecture withthe potential to triple data communication speeds
- Artificial Intelligence (AI): Technology is increasingly performing functions that previously required human intelligence
- Autonomy: Robotics is automating functions with little to no human input
- Cloud computing: Companies are outsourcing their data storage and management needs to the cloud
- Internet of things: A system of interrelated computer systems connected through the internet
Companies benefiting from the secular themes are present in portfolio of Amundi Funds – US Pioneer Fund, the underlying fund of SBI International Access US Equity Fund of Fund.
Why invest in SBI International Access US Equity Fund of Fund?
- Global diversification provides single country risk diversification and exposure to themes not present in Indian stock market.
- US equity market is the largest in the world and is home to some of the largest companies with high growth potential in the global market. Since US market is the core component of global indices, it should be the most logical choice for any investor looking to invest in equities.
- You can get further gains, if the INR depreciates versus the USD. Over the past 10 years, INR depreciation itself would have contributed a significant portion of Rupee returns from global equity.
Download Key information memorandum of SBI International Access US Equity Fund of Fund
About SBI International Access US Equity Fund of Fund NFO
- The subscription window for the NFO is 1st March 2021 to 15th March 2021. You can buy units at par value during this window and at prevailing NAVs thereafter
- Minimum application amount will be Rs 5,000 and multiples of Re 1 thereafter
- Additional purchase amount will be Rs 1,000 and multiples of Re 1 thereafter
- You can also invest in this scheme through SIP (minimum monthly SIP instalment is Rs 1,000 multiples of Re 1 thereafter). Refer to the Scheme Information Document for more details
- Mr Mohit Jain is the fund manager of this scheme
- This scheme is suitable for investors looking for capital appreciation and diversifying single country risk through exposure to US equities
- Investors need to have very high risk appetite for investing in this scheme
Download Scheme information document of SBI International Access US Equity Fund of Fund
You should consult with your financial advisor if SBI International Access US Equity Fund of Fund is suitable for your investment needs.
Mutual Fund Investments are subject to market risk, read all scheme related documents carefully.