Rising economic growth propels consumption in an economy. Corporate entities are best positioned to benefit from increased consumption in Indian and Chinese economy. No wonder, investors across the globe are trying their best to buy into such companies. A new fund offering (NFO) from Mirae Mutual fund — Mirae Asset India China Fund — is here to tap this opportunity.
The fund is an open-ended scheme that aims long-term capital appreciation through an actively-managed portfolio. The fund will invest in equity and equity-related securities of companies that are likely to benefit directly or indirectly from consumption-led demand in India and China. The scheme will invest at least 65% of the money in Indian equities, 10-35% of the money in Chinese equities and up to 25% of the money will be invested in money market securities. The fund has chosen 65% of MSCI India Consumption Index and 35% of MSCI China consumption index as a benchmark for the scheme.
As India and China experience economic growth, the purchasing power of their populations is expected to go up. The rising aspirations of the middle class will ensure that there will be a burgeoning demand for a host of goods and services. Consumer discretionary, consumer staples, autos, realty, healthcare, education, media & entertainment, financial services, telecom, transportation are some of the beneficiaries of the consumption boom. The fund aims to pick up investment opportunities in such sectors available at attractive valuation and have reliable management.
The key risk is that the investor does not get to invest in opportunities arising in 'non-consumption' sectors such as capital goods, engineering. Investors are also exposed to risk of drastic changes in consumption patterns and consumption as a theme failing to deliver.
The minimum investment is . 5,000 and the fund offers both growth and dividend options to the investors. The fund has a 1% exit load if the investor decides to redeem before completing one year from the date of allotment of units. The new fund offer closes on March 23, 2011.
WHY YOU SHOULD INVEST:
To own consumption-driven growth in the high economic growth phase of Indian and Chinese economy.
WHY NOT TO INVEST:
The fund does not allow you to participate in opportunities available beyond the consumption space.
