Warren Buffet was quite fond of companies with highly visible consumer brands such as Coca Cola, Gillette and P&G. And some of the most well-known global brands come from foreign companies listed in the US and Europe. It is quite difficult for Indian investors to buy such overseas stocks directly through their broker.
Now, Sundaram Mutual Fund has flagged off World Brand Fund, a 3-year close end equity fund which will invest in the companies that own the world's leading brands. Companies that own leading consumer brands sell their products across geographies, product categories and target consumers all around the world and so are resilient to market fluctuations. Brands form an integral part of our day to day lives and this fund aims to benefit from their prospects by assessing the sustainable competitive advantage of the companies which own these brands. Investors who aspire to make companies like Google>, Nestle, Microsoft, Apple, HSBC a part of their portfolio are targeted by this fund. The fundâ€™s investment thesis is that the demand for these aspirational brands will increase with rising urbanisation, especially in emerging markets.
The fund will not only look at each stock's market value but also consider the market share and brand equity of each portfolio company. It is easier for stronger brands to build a competitive moat and sustain pricing power across economic cycles.
The AMC will launch three schemes under this series with durations of between 18 months and 60 months. The first offer opens on November 20 and closes on Dec 2, 2014, with a minimum corpus of ₹10 crore as target. These are closed ended schemes where the first fund has a three year investment horizon and the second one comes with a five year lock-in period.
While international funds were the flavour a year ago, it is mainly India focussed funds which have been flagged off in the last three months as the Sensex surged to new highs. Seen in this context, the fundâ€™s investment strategy is somewhat contrarian. This international fund is being launched after a gap of three months. Investors must however note that overseas exposures carry currency risk. And given that this is a thematic fund and a close end one at that, exposures must be kept to a small proportion of the portfolio.