Mutual Funds investing in US markets beat desi funds

With the rupee depreciating sharply against the US dollar and developed markets faring much better than domestic stock indices, equity mutual funds (MFs) that invest in the US stock markets have emerged as one of the best performers.

Equity MFs, which invest exclusively in shares of companies listed in the US bourses, have surged 20-36% in the last one year, the second-best performance in the equities category.

Equity MFs with exposure only to shares of IT (information technology) companies, alone have fared better. MFs, which deploy money in the US market, have emerged on the top of the performance charts in the ‘Equity MF International’ category, which comprises funds that invest across major global markets.

The rupee has fallen about 14.3% so far in 2018, the worst performance among Asian currencies.

A sharply depreciating rupee boosts the returns of MFs that buy into the US stock markets as the shares are priced in dollars. Moreover, the US stock markets have seen a robust rally with key indices delivering higher returns than Indian markets. While the NASDAQ-100 index has surged 16.2% in the last one year, the S&P 500 index has gained 9.2% during the timeframe.

In contrast, the benchmark Sensex and the broadbased Nifty have advanced by only 2.1% and 4.4% respectively in the last one year. Equity MF schemes with substantial exposure to stocks of technology-driven behemoths such as Apple and Amazon have given substantially higher returns than others in the category, data with Value Research, which tracks MFs showed.