International themes could boost your portfolio

Last Updated: Wed, Sep 07, 2011 20:11 hrs

While retail investors can look at international mutual fund schemes, HNIs have good options in real estate.

With the Indian stock markets being among the worst-performing in the world in recent months, many, especially high net worth individuals (HNIs), are looking abroad to maximise returns.

G Chokkalingam, executive director and chief investment officer, Centrum Wealth Management, says real estate in Europe, especially Britain, is available at cheap rates and likely to fall even more. "One should invest in real estate in a phased manner. Investors had made good money by investing in real estate in countries like the UK, post the Lehman crisis. One can look at agri-commodities like natural rubber, too," he says.

Adding: "The perception-driven volatility is rather high in equities at the moment. So, it is best for a person with an average risk profile to have only about 30 per cent exposure to it, whether it be domestic or global equities."

Investing in equities or commodities abroad is more cumbersome than investing domestically. This can be very risky, as sitting in India, we might not be able to gauge foreign markets properly. Those who want to participate in the international markets but lack the funds can use the mutual fund route. These funds pool money from local investors and invest in stocks or other assets.

According to Value Research, international funds gave investors three per cent returns over the past year. But in the past six months, these gave a negative return of 8.9 per cent and in the past three months, minus 7.3 per cent.

HSBC Asset Management has a Brazil-dedicated fund and Reliance AMC has an Indonesia fund (Reliance Indonesia Opportunities Fund). JP Morgan's Asean fund invests in Singapore, Indonesia, Malaysia, Thailand, Vietnam, Philippines, Cambodia, Brunei, Laos and Myanmar. Motilal Oswal AMC has a Nasdaq-linked exchange traded fund (ETF).

Rajesh Saluja, CEO and managing partner at ASK Wealth Advisors, says one should not look at a particular economy but at 'themes'. "One should look at ETFs linked to gold, silver and platinum, for instance. Investing in developed markets is very risky. Whereas in emerging markets, the GDP is very skewed. A majority of the contribution to the GDP comes from a single sector," he explains.

However, not everyone is so keen yet on the international theme. Prashanth Prabhakaran, president-retail broking at India Infoline, says he is recommending Indian equities and commodities to his retail investors and high net worth clients. "After six months to a year, if the scenario has changed, we will advise our clients to invest in the markets that look the most attractive at that point in time. The global markets will take some time to recuperate from these levels," he explains.

However, for ones looking abroad, there are options, especially for HNIs. Armed with the $200,000 per head limit allowed by the Reserve Bank of India, an investor can look at assets classes abroad.

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