Mirae Asset Global Investments has come out with a New Fund Offer, Mirae Asset China Advantage Fund. This is a Fund of Fund scheme which will invest 80% in Mirae Asset China Sector Leader Equity Fund through a Feeder Fund named Mirae Asset Global Discovery Fund (MAGDF) operating in Luxembourg and balance 20% in DIRECT CHINESE STOCKS.
The Feeder Fund MAGDF is incorporated in Luxembourg to avoid Double Taxation.
Many financial experts have expressed doubts on Chinese numbers authentiacity. The Fund Manager Gopal Agarwal admits, "yes, there are doubts raised, but you should note that Reputed International agencies like the UN, IMF have endorsed these figures and we have no doubt that China is on the way to become a Global Economic Gaint. Our Fund, Mirae Asset China Advantage Fund is poised to take advantage of this growth and reward our investors".
I asked him why the fund has underperformed its Benchmark in the last 1 year. Mr.Gopal Agarwal said : "Actually, in Dollar terms, our Funds has outperformed its Benchmark, but because of massive depreciation in Koreon Won, this underperformance is reflected. We do not expect a repeat of this".
THUMBS UP :
1. China is on a High Growth trajectory and the macro risk associated with the Country is very low.
2. Provides Good Diversification and meet investor's asset allocation.
3. Mirae Asset Global Investments (HK), the investment manager to Mirae Asset China Sector Leader Fund, has a dedicated research team focusing on investing in the Chinese markets and currently manages over USD 8 billion** (approx Rs. 38400 crores) as on August’09 and has been in China since 2001.
THUMBS DOWN :
1. Investors in this Fund will have to bear with Currency Risk.
2. Being a Fund of Funds, there is a possibility of more expenses compared with a regular Diversified Fund.
3. The Fund will be treated as a Debt Fund due to its investment in Foreign Stocks.
COMMENTS & RECOMMENDATION :
Chinese Markets are quoting below their average at a PE of 12, whereas the average PE for the last 6 years has been 18. Moreover, the Chinese Corporate Growth is expected between 18-24 and shows that Chinese stocks are quoting at less than Fair Value. The Fund is timed right to take advantage of this.
The Fund is a good diversification provider.
Mirae Asset India's Funds have given good returns, especially their flagship fund, Mirae Asset India Opportunities Fund.
Invest with a 2-3 year perspective.
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