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Pinebridge Joins the American Party

Indian mutual funds’ love affair with US stocks continues as Pinebridge AMC also launches a US-focussed fund, the Pinebridge India - US Equity Fund. While we at Value Research are generally strongly opposed to investing fads, international investing--especially in the USA--is something that we strongly approve of. Diversification means not just by sector and company but also global diversification. Unfortunately, a vast majority of Indian fund investors are under-invested.

While earlier, the menu of International funds being offered by Indian AMCs was small and dominated by flavour-of-the-day thematic funds, now there are a decent number of general diversified funds with a decent track record. One interesting advantage of some international funds--the current Pinebridge one included--is that they already have a track record even at the time of the NFO. How is this possible? Because they aren’t really new funds. The fund being launched in India is just a feeder fund for an American fund from the parent AMC, the US Large-cap Research Enhanced Fund. This underlying fund has been in operation for about eight years and has beaten the S&P500 consistently during this time.

One caveat must be mentioned about international investing in general. In recent times, international funds--specially US focussed ones--have consistently done much better than the Indian markets. While this has been great news for those who have invested in these funds, it can result in an enhancement of investors’ biggest problem--relying too much on recent performance for making decisions. The great performance has been the result of the US markets’ bounce back from a long stagnation as well as a simultaneous sharp correction in the INR-USD exchange rate that was pent-up for a while. As the standard warning goes, past performance may not be sustained.

Nevertheless, as we have said earlier, a steady SIP in some US-centric funds should be part of the staple of any Indian investor.