Invest in ING Latin America Fund, but keep an eye on risks
Falling markets have made investors not only resort to bargain hunting in India, but also look for opportunities outside.
By ET Bureau |
MUMBAI: Falling markets have made investors not only resort to bargain hunting in India, but also look for opportunities outside. The latest fund offering ��� ING Latin America Fund ��� is worth considering.
The fund will predominantly invest in ING (L) Invest Latin America Fund (mother fund), which, will invest in equities in the Latin American markets. The mother fund has a good track record ��� 46.6% INR returns over the last 3 years compared to 46.2% offered by the benchmark MSCI 10/40 Latin America Index.
The fund offers an exposure to Brazil, Mexico, Chile and Argentina, which have, so far, not shown much correlation with the Indian and the US markets. This augurs well for those looking for meaningful diversification. The Latin American countries are experiencing healthy GDP growth and have a favourable demographic profile, just like India. This ensures healthy local demand and consistent labour supply . They are rich in resources and are developing as good outsourcing destinations.
Yet, there are certain risks that should be kept in mind. The first hurdle is to know the Latin American countries. Tracking the geopolitical and economic developments there is a task in itself. Currency risk is inherent in such a fund and may eat into the returns.
As at least 65% assets may be invested in foreign equities, capital gains tax will be at higher rates, compared to those applicable for capital gains on Indian equities. The offering is good for those looking for diversification and are ready to take risks. A direct application to the fund house can save on the 2.5% of entry load.
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