In India, it is rare to see a foreign country specific fund. Although we have seen some recent launches like the Mirae India-China Consumption Fund, that too has a mixed focussed which includes the home country India, and a small portion of exposure going to China.
Therefore, Indian investors who might be looking for investing explicitly in an overseas country do not have any choide. So now, to fill this big gap, HSBC Mutual Fund house hace come out with its unique offering called the HSBC Brazil Fund, which is focussed solely on Brazil which is another developing country like India and also a key member of BRIC community group.
In this article, we will analyze how good is this HSBC Brazil Fund NFO, whether this HSBC Brazil Fund offers anything new or unique for the investors and whether the investors should invest in HSBC Brazil Fund.
HSBC Brazil Fund NFO: Review Analysis & Details
Let's begin with some basic details about HSBC Brazil Fund.This is a Fund of Funds (What's this?) meaning, your invested money in HSBC Brazil Fund will actually be invested in an overseas funds (end funds). In this case, though it is cited that the end fund will be HSBC Global Investment Funds (HGIF) Brazil Equity Fund, it is also mentioned that the fund managers might invest in other funds as per their wish and prevailing market conditions.
So in a nutshell, what this HSBC Brazil Fund will do is collect money from investors and put it in other overseas funds like HSBC Global Investment Funds (HGIF) Brazil Equity Fund or other funds.
What are the NFO dates for HSBC Brazil Fund?
The NFO period for HSBC Brazil Fund is from April 15 2011 and will close on 29 April 2011. Scheme reopens on 9th May 2011 for normal trading.
What is so unique about this HSBC Brazil Fund?
Most important and unique feature of this fund is that this is the only possible mutual fund available in India which will give Indian investors a chance to take direct exposure to equities in Brazil, which is an emerging economy.
Around 95% to 100% money will be invested in the units or shares of the end fund which is reported to be HSBC Global Investment Funds (HGIF) Brazil Equity Fund (as of now). However, the fund manager might invest in other Brazil based similar funds as the need be.
Rest 5% will be in liquid money market and debt instruments.
There are lot of good prospects for Brazil Country specifically in the space of infrastructure development for the following reasosn:
1) It will host the 2014 Football World Cup
2) It will also host the 2016 Olympic Games
3) It is among the largest producers of many key commodities and food grains, like Coffee
4) Part of BRIOC countries, an emerging market powershouse with well diversified export base
What are the other competitor products available in comparison to HSBC Brazil Fund?
We aren't aware of any Brazil focussed funds available in India for investment.
What are the risks of investing and trading HSBC Brazil Fund?
First and foremost, you are giving your money to HSBC fund managers who will be investing it as per their thought. You run the risk of the fund managers not able to keep up the returns in positive territory.
Second, there is Forex risk (See Forex Risk and Hedging). Ultimately, what you pay in Indian Rupee will get converted to an international currency like USD, and then get invested. So what if the end fund gives you a 20% return, but the Indian Rupee gets stronger against the USD which will mean you may loose out on substantial gains when you redeem your fund units.
Third, this is a country specific risk. Remember all your focus will on on Brazil. If there is a problem in Brazil, like social unrest, natural disaster which causes the overall country's economic situation to suffer, the returns will come down from this fund.
Final Thoughts about HSBC Brazil Fund?
A good fund for investors who trust the HSBC fund managers and their investment skills and also believe that Brazil market will generate positive returns. Being the only fund available in India offering investment in Brazil is unique in itself.
During NFO period each unit cost Rs. 10 per unit during NFO period
Minimum investment Rs 10,000 and in multiples of Re 1 afterwards.
Multiple options available for investments in HSBC Brazil Fund :
Growth Option
Dividend Option - Payout, Reinvestment facilities
HSBC Brazil Fund Entry Load: Nil
HSBC Brazil Fund Exit Load: 1% if exit within 1 year, NIL afterwards.
SIP or systematic investment plan? Avaialble post NFO period.
No tax benefit will be available in HSBC Brazil Fund
MSCI Brazil 10/40 Index will be the benchmark index for tracking the performance of HSBC Brazil Fund
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