Mumbai: Tata Mutual Fund has amended the scheme information documents (SIDs) for key mutual fund schemes to bring in international securities. The schemes affected include Tata Large Cap Fund, Focused Fund and Digital India Fund. The last among these is an IT sector fund where the AMC is looking to add global tech companies. The changes will be effective from 26 November.
“We will look at international stocks in the Tata Digital India Fund to begin with because so many high growth technology companies are listed outside India. For the other two schemes we will take a more gradual approach to international equities,” said Rahul Singh, Chief Investment Officer (CIO – Equities) at Tata Asset Management Company (AMC).
The amendments to Tata SIDs will allow the fund house to take exposure to international stocks up to 20% of the scheme corpus. US technology stocks have delivered strong returns over the past few years. In rupee terms, the NASDAQ has delivered a CAGR of around 24% over the past 5 years. Over the past year, it us up nearly 54%.
Market regulator Sebi last week hiked the overseas limit for MFs due to an increase in interest for international investing. It doubled the limit per fund house to $600 million, as Mint reported here (https://bit.ly/2U8n0iZ).
The foreign investment quota follows a first come first serve model apart from a minimum $50 million reservation per AMC. This gives an advantage to early movers in this space. Earlier this year in March, Edelweiss Asset Management launched the Edelweiss US Technology Equity Fund of Funds, a feeder fund investing in US tech stocks. The fund is up 42% since launch.
Tata AMC has also introduced a provision to invest in Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InVITs) in Tata Large Cap Fund, Tata Hybrid Equity Fund, Tata Infrastructure and Tata Retirement Fund Conservative and Moderate Plan up to 10% of assets.