Sundaram Global Brand is an international mutual fund scheme
from Sundaram Mutual Fund.
As the very name suggests, it is an international fund that
invests globally.
It is not restricted by any sector or region or theme.
This is unlike most international mutual fund schemes available
for subscription to the Indian investor.
Sundaram Global Brand Fund is an open-ended Fund of Fund scheme investing in Sundaram Global Brand Fund, Singapore as a Feeder Fund.
Fund |
Sundaram Global Brand |
Category |
FOFs (Overseas) |
Fund Manager |
Mr. Rohit Seksaria Mr. Ratish Varier |
Benchmark |
Dow Jones Industrial Average TRI Index |
Features
of Sundaram Global Brand Fund
The fund invests only in the top 30 listed leading global
brands.
It has dual diversification benefits, geographic as well as
portfolio wise.
Due to dual diversification, it is usually less volatile
compared to other international funds.
It can benefit from any rupee weakness.
Investment
process of Sundaram Global Brand Fund
The fund will be investing in the top 30 brands globally.
Preference would be given to brands that have geographically
diversified revenues.
The 30 companies would be further divided into three
categories:
- Category one would consist the top 10 brands
- Category two would consist the next 10 brands.
- Category three would consist the remaining 10 brands.
Brands belonging to category one would have a weighting
allocation of 5% each.
Brands belonging to category two would have a weighting
allocation of 3% each.
Brands belonging to category three would have a weighting
allocation of 2% each.
At no given point would a single stock hold more than 10%
and a sector more than 50%.
What
is an international mutual fund?
An international mutual fund is any fund that invests
outside Indian markets.
This could be both region specific or theme specific.
International mutual funds can either invest directly or in
another fund, better known as fund of fund.
Their correlation with the Indian markets would differ
depending upon where you invest geographically.
The lower the correlation, the better for diversification.
International mutual funds work as a very good hedge against
currency volatility.
Sundaram
Global Brand Fund Portfolio
Year |
Entry |
Exit |
2015 |
JP Morgan, Inditex,
Anheuser -Bud |
Volkswagen,
HSBC, Kellogg’s |
2016 |
Hermes
International |
Hewlett –
Packard |
2017 |
No change |
No change |
2018 |
Accenture |
eBay |
2019 |
No change |
No change |
An interesting feature of this fund and at the same time what differentiates it from the other few handful of global funds is the manner in which it views brands, both quantitatively as well as qualitatively.
A strong brand represents a loyal consumer base which in
turns reflects faith, a stronger brand presence means a greater competitive edge
which can be better ascertained by the fact that most companies in the fund’s portfolio are leaders in their respective fields.
Additional reading: Click Here to read everything you need to know about a Mutual Fund Nav
Difference
between global and international mutual fund
An international mutual fund is one that invests in specific
countries or regions.
A global fund on the other hand is not restricted by
specific countries or regions.
A Europe based fund is an international mutual fund since it
invests only in Europe, a specific region.
A global brand fund or a global mining fund is a global fund
since it invests across the globe with no region restrictions.
Taxation
for Sundaram Global Brand Fund
International mutual funds for taxation purpose are treated
as debt mutual funds.
The taxation rules that are applicable on debt mutual funds
are applicable on international mutual funds too.
It is the same for all international mutual funds
irrespective of the theme or geography.
Meaning a European based international mutual fund will be
taxed just as a US, emerging markets or Asia based.
A technology based international mutual fund will be taxed
in the same manner as a natural resources fund.
Taxation for international mutual funds can be better
classified further into LTCG & STCG
LTCG
For long term capital gains, taxes will be charged on gains
held for more than 36 months.
The LTCG rate is 20% after indexation.
STCG
Short term capital gains tax is charged on gains held for
less than 36 months.
Short term capital gains are added to your income and taxed
as per your income tax slab.
International mutual funds are also charged 0.005% stamp
duty like any other mutual fund.
Advantages
of International mutual funds
Low Co-relation
International mutual funds have a very low co-relation to
Indian based mutual funds.
This stands true for global funds as well.
Due to a low co-relation, international mutual funds provide
diversification in the true sense.
More often than not investors invest in various funds with
the aim of diversification but end up unknowingly investing in the same set of
companies or strategy via different schemes.
Diversification
The biggest advantage of international mutual funds is that
they provide diversification.
They are very rarely the first fund of a new investor or
even take up the major portion of anyone’s portfolio.
They are usually an afterthought or take up a very small portion
of a mutual fund portfolio.
They invest in companies and markets that Indian based
mutual funds do not.
Exposure
An international mutual fund can give you exposure to
companies and markets that an Indian based mutual fund cannot.
For example, it can invest in a search engine giant like
Alphabet which is not possible with Indian based mutual funds.
Another advantage with exposure is the option to pick a
company with an attractive valuation which is listed across various
geographies.
For example, nestle is listed both in India as well as in
foreign markets.
Disadvantages
of international mutual funds
Taxation
For the purpose of taxation, international mutual funds are
treated as debt mutual funds.
This makes it less desirable than Indian based equity mutual
funds which have a far more attractive taxation system.
If you are an investor that frequently invests and redeems
based on random advice then this makes it even far less desirable.
Understanding the market
Whatever international mutual fund you pick, understanding
the fund and its underlying strategy is very important.
This is true for an international mutual fund as it is for
an Indian based mutual fund.
Sadly far too many investors go about choosing funds based
on their recent returns with no understanding and end up frequently entering
and exiting funds.
This only adds to their charges with exit loads and
taxation.
You should not be investing in international mutual funds
merely because you can.
You should only if you have a plan and a very good
understanding of the fund and the underlying strategy of the fund.
Sadly many investors venture into international mutual funds
out of fear of missing out, that is not a good enough reason to invest in
international mutual funds.
For portfolio enquiries, email us with your doubts at info@themutualfundguide.com
Copyright © 2021 The Mutual Fund Guide, All rights reserved