Conservative mutual fund investors searching for global allocations could consider placing cash in the HDFC Developed World Indexes Fund of Funds.
Since valuations in created markets are at a premium to long-term averages, investors should spread their investments throughout some undefined time frame, said financial advisors.
HDFC Developed World Indexes FoF will invest in Credit Suisse Index Funds, which will invest in five global products that bet on markets in Europe, Asia, the Pacific region, and the US among others.
The fund said it is not quite the same as the current international offerings by rival funds since it has exposure to 23 developed countries. Most other international funds in India are country or region specific or thematic.
“Through this single scheme, an investor gets access to developed markets. Investors can consider this as a core portfolio holding,” said Vishal Dhawan, founder, Plan Ahead Wealth Advisors.
In this fund, the US markets will have the highest exposure at 67%, followed by Europe at 19.1%, Japan at 6.6%, Canada at 3.3% and other developed markets barring Japan, at 3.3%. Generally speaking, the top 5 weights in the MSCI World Index are 22.5% in technology, 13.3% in financials and 12.8% in healthcare, 11.9% in consumer discretionary and 10.6% in industrials.
Financial planners said passive funds wagering on developed markets may be preferred wagers over actively-managed products, which have battled to beat their benchmark indices. The plan will have an expense ratio of 0.40% for the direct plan. The regular plan will have an expense ratio of 1%.
Investors ought to try not to put lumpsum allotments in the fund at this juncture. “Valuations in developed markets are at a premium to long-term averages. Investors could stagger their investments over a period of time,” said Dhawan.
Disclaimer: The views, suggestions, and opinions expressed here are the sole responsibility of the experts. No Funds Spectrum journalist was involved in the writing and production of this article.