UTI Mutual Fund has filed papers with SEBI for the UTI Global Focused Growth Equity Fund. The new scheme will operate as an open-ended fund of funds (FoF) that invests in units of an international equity fund, the T. Rowe Price Funds (TRPF) SICAV (Société d’investissement à Capital Variable) – Global Focused Equity Fund. Investors of this new FoF scheme will benefit from exposure to international equities without having to make direct stock investments in overseas stock exchanges.
UTI Global Focused Growth Fund will primarily invest in units of the TRPF SICAV – Global Focused Equity Fund which will account for 95 to 100% of the scheme’s portfolio. The remainder of the portfolio (up to 5%) of assets will be invested in units of domestic mutual funds as well as various money market investments such as reverse repo and CBLO (Collateralized Borrowing and Lending Obligations). This fund of fund (FoF) scheme will not invest in derivatives, unrated instruments or securitized debt and will also not participate in securities lending. Prospective investors should however keep in mind that the TRPF SICAV – Global Focused Equity Fund may make derivatives and securitized debt investments.
MSCI All Country World Index (ACWI) will serve as the benchmark of the new FoF scheme, which is also the benchmark of the TRPF SICAV – Global Focused Equity Fund. The MSCI ACWI is designed to operate as a representative index of large and midcap equities across 23 developed markets and 24 emerging markets globally. The 1 year, 3 year and 5 year returns posted by the MSCI ACWI were 11.41%, 11.85% and 9.67% as of 31st August 2018 in US Dollars. At the same time, the TRPF SICAV – Global Focused Equity Fund showed significant outperformance with returns of 24.48%, 18.77% and 16.07% for the 1 year, 3 year and 5 year periods (as of 31st August). In a scenario of rupee depreciation, the INR returns of the Index and hence the UTI Global Focused Growth Equity Fund could be higher than these figures. The situation will be reversed in case of rupee appreciation.
The top five investments of the TRPF SICAV – Global Focused Equity Fund are Amazon (3.9%); Becton, Dickinson & Company (3.3%); Charles Schwab (2.93%); Alphabet (2.62%) and JP Morgan Chase (2.46%).
UTI Global Focused Growth Fund will be managed by Kamal Gada, who currently serves as the dedicated fund manager for all overseas investments of UTI MF. The management of the new FoF will tend to follow a passive style and the role of fund manager in affecting the scheme’s performance will be limited. At present, Kamal Gada also serves as co-manager of two other passively managed funds – UTI Sensex Exchange Traded Fund and UTI Nifty Index Fund. The five year returns of these schemes were recorded at 15.22% and 15.09% on 31st August 2018, which is in line with the returns posted by their chosen benchmarks.
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