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Offshore funds, a win-win for industry, investors

With domestic equity markets losing sheen, mutual funds are increasingly looking outside India for investment opportunities



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In the last one-year, close to two dozen offshore funds have been launched to capture the turnaround in the international markets, and many more are lining up for approval from the regulator.

Offshore fund-of-funds are feeder funds which invest in equity funds in the US, Europe and the emerging These funds are available to both retail and high networth individuals (HNI). However, fund houses feel these products are more suited for savvy HNI investors who have a better understanding of the global

Fund analysts said that it was the underperformance of the Indian markets vis-à-vis its global peers in the last one-year that led to the rise in demand for these products.testing.. we are here....

"Of late, the rupee depreciation has given good returns to investors. Also markets like the US and Europe have done well. So large investors have been looking at opportunities outside India," said R S Srinivas Jain, executive director and chief marketing officer, SBI Mutual Fund.

While Indian equity indices have been a victim of a weakening currency and faltering economy coupled with fears over an early end to US Federal Reserve's tapering, the US and European markets have been showing signs of a turnaround. The offshore fund category in the last three years has given average returns of about 6 per cent, according to Value Research data.

Fund analysts said that besides cashing in on the rise in the developed markets, investing in these funds is also part of a diversification of their investment portfolio.

"There is an increasing sense of disenchantment with Indian equities which is making investors look for equity opportunities outside," said Sunil Mishra, CEO, Karvy Private Wealth.

The rupee stabilising at 60-63 levels versus the US dollar was another incentive for investors to look outside.

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First Published: Mon, September 14 2020. 18:35 IST