Mirae Asset Korea Discovery Fund

by Manshu on November 11, 2009

in IPO/NFO

Mirae Asset has filed its offer document for a new fund – MIRAE Asset Korea Discovery Mutual Fund.

This is a fund of fund, which means that it will hold other mutual funds as its assets. As the name suggests, the objective of the fund is to invest in Korean equities. It will do that by investing in the units of the Mirae Asset Korea Fund. It will also invest in other exchange traded schemes focused on Korea, and some part of the fund will be invested in debt and money market securities in the domestic market.

Asset Allocation

Here is how the asset allocation will look like:

Instrument

Indicative Allocation

Minimum Maximum
Units of Mirae Korea Equity Fund or other equity assets invested in Korea 80 100
Money market and debt instruments 0 20

Since a large part of the fund is expected to be invested in the Mirae Korea Equity fund, let’s take a look at what that fund is all about.

Mirae Korea Equity Fund

The Mirae Korea Equity Fund is a bottom up stock selection fund which focuses largely on equity investments. This means that the portfolio manager of the Mirae Korea fund analyses stocks and companies, — and then selects stocks that promise to provide superior returns.

Benchmark

The Mirae Asset Korea Fund is benchmarked against the KOSPI index, so here is a chart of how KOSPI has performed over the last ten years.

KOSPI

Fees and expenses

This fund will have a recurring expense of 0.75% of average net assets. This is the fee of the fund itself. Since this is a fund of funds, it will bear fees and expenses of the underlying fund also. One distinct disadvantage of a fund of funds is that investors have to bear double fees. The fee of the fund itself plus the fee of the underlying fund which this fund holds as well. The expense and fee of the underlying fund varies and can be at a maximum of 2.50%. So, you need to add that to 0.75% to get an accurate picture of the expenses of this scheme.

Conclusion

As far as I know, this is the first fund that offers Indian investors exposure to Korea. If you want that kind of thing then this fund is a good option for you. Since Korea and India are both emerging nations, you will really not be diversifying much by the way of owning Korean stocks. The fact that it is a fund of funds makes it relatively more expensive because of the double fees.

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