JPMorgan US Value Equity Offshore Fund

JPMorgan US Value Equity Offshore Fund is a new fund that will be launched soon, and I came to know about it when Kapil Visht commented about it earlier this week.

The last couple of years has seen US based funds perform very well in India (Read: Utility of US Based Funds in India), and I am certain that mutual fund houses will launch a lot more US based funds in the days to come.

There will be a positive feedback loop where more people learn about US based funds, and ask about it — in turn the funds will launch their own schemes and that will get publicity thereby making more people aware about them, and from 4 the odd fund we have right now the figure is going to reach double digits soon.

JPMorgan US Value Equity Offshore Fund is a fund of funds which will invest in JPMorgan Funds – US Value Fund, which is a fund that invests in American stocks. Interestingly, JPMorgan Funds – US Value Fund is not listed in the US but listed in Luxembourg. The fund’s webpage is located here.

This means that the fund itself trades in Euros while the underlying assets are in USD. For Indian investors, does this add another layer of complexity – Indians invest in INR in a fund that trades in Euros which then buys assets in USD?

The original fund prospectus states that this is a currency hedged fund which means that the USD – Euro currency changes shouldn’t affect your returns but in real terms I don’t know if this is really 100% hedged or not.

I say that because this is an actively managed fund so you can’t simply compare it with the benchmark and see what the difference is. Currently, the returns for this fund is as follows:

Time Frame US Value Fund S&P 500
1 month -1.94% -1.50%
3 months 3.53% 2.30%
1 year 20.91% 20.20%
3 years 58.74% 49.10%
5 years 27.71% 25.65%

Performance (as at 30/06/13)
As you can see this actively managed fund has done well for itself in the last few years and as far as past record goes – this active fund has done well. The expenses are fairly high for this fund, and because the fund of fund structure means double expenses, the Indian investor will pay an additional layer of fee over and above the original fund.

At present the options are limited if you wanted to invest in the US by means of a locally listed mutual fund, and I feel this is a good new scheme that gives Indian investors another good option.

3 thoughts on “JPMorgan US Value Equity Offshore Fund”

  1. Hedging costs and two layers of fund management costs will take away the active returns. Why take the Euro route to invest in US

    1. Hi Ankur,

      The returns are in Euros for the underlying fund and it appears that they are hedging well since they have been able to beat the S&P 5oo consistently.

      The double fund management fee is something we have to take cognizance of and see how far the Indian fund deviates in performance to the European one. Based on the options available right now, I think this will prove to be better, but let’s see based on a year’s performance or so.

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