Deutsche Asset Management India today announced the launch of two funds: DWS Inflation Indexed Bond Fund and DWS Top Euroland Offshore Fund. The DWS Inflation Indexed Bond Fund new fund offer period is from January 16 to 27, 2014 while DWS Top Euroland Offshore Fund will be available for subscription from January 9, 2014. Both the funds are open ended.
DWS Inflation Indexed Bond Fund will invest in Inflation Index Bonds. These are predominantly issued by the Government of India. The Fund is an open ended debt fund and will predominantly invest in these securities with the intention of delivering above inflation returns to investors. The returns are therefore linked to inflation rate.
As per the last RBI auction in Dec 2013, WPI (Wholesale Price Index) linked IIIBs are currently yielding 3.6% above WPI, whereas WPI itself is currently at 7.5% (as on Nov 30, 2013). This makes IIBs very attractive for investors. Over the last 10 years, average WPI inflation in India was 6.7%.
The Fund also aims to benefit from the accrual income and potential capital appreciation from IIBs. By investing through the mutual fund route, investors have the added benefit of ease of investment and liquidity along with tax efficient returns. The benchmark for the fund is I-Sec Composite Index.
Suresh Soni, MD & CEO, Deutsche Asset Management India said, "The DWS Inflation Indexed Bond Fund will offer investors an attractive opportunity to earn inflation adjusted returns" While, globally investors have seen benefits of inflation linked instruments, we believe these instruments are especially relevant for India, given our persistently high inflation level, and therefore are pleased to offer this fund. In addition, by investing through the DWS Inflation Indexed Bond Fund investors get the added benefit of liquidity in their portfolio and tax efficient returns."
DWS Euroland offshore fund is an open ended overseas fund of funds. Since June last year, the Euroland has witnessed signs of economic recovery and many companies in Euroland are expected to benefit from the same. Euroland represents 20% of the global GDP and 75% of the pan European GDP. Euroland is made up of 18 European countries and a common currency. The economic scenario in Euroland suggests that fiscal drag is easing, while early indicators are signaling strong improvement in growth. Corporate earnings are significantly below previous peak, offering a lot of recovery potential. Compared to US equity markets, cyclical adjusted Euroland company PEs are at low levels. These indicators seem to suggest a potential upside for Euroland. The benchmark for the underlying fund is Euro Stoxx 50.
Fabian Frankenberg, Senior Product Specialist for Equities, Deutsche Asset & Wealth Management said, "The Euroland is one of our best performing global funds. A strong improvement in macro data and uptick in Eurozone manufacturing PMIs strengthens the recovery process in Euroland.
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