Natural resources have been hogging the limelight of late, and fund managers across the globe also seem to be gung-ho about their prospects. Indeed, the lackluster equity markets as well as the relentless rally in commodities are triggering the fund houses to launch funds that invest in commodities and natural resources. And, India is no exception to this emerging trend. But since the extant law in India does not permit mutual funds to invest directly in commodities, fund houses are devising schemes that invest in commodity-oriented stocks. But, as there are only a handful of commodity-focused stocks on Indian bourses, many of these fund houses are now mulling over investing in overseas companies that are directly or remotely engaged in extraction or production of commodities from natural resources. Also, fund houses are now treading a feeder-fund route, whereby the fund will invest in a global fund with proven past track record.
The investment universe of these schemes is determined on the basis of primarily picking stocks of domestic as well as overseas companies which are associated with discovery, development, production or distribution of natural resources. In India, Reliance AMC has been the early bird in this regard. In January this year, Anil Ambani's Reliance AMC launched India's first natural resources fund. And the fund, christened as Reliance Natural Resources Fund, which was closed on January 30, had received a humongous response (nearly Rs 6,000 cr) in terms of subscriptions. The investment criteria of the scheme has been to invest 65-100% in domestic equities and/or up to 35% in foreign equities. Apart from this, DSP Merrill Lynch Mutual Fund, one of India's leading mutual funds, has amassed Rs 265 cr through its DSP ML Natural Resources and New Energy Fund, an open-ended equity growth scheme. DSP's Natural Resource and Energy Fund was opened for subscription on March 3, 2008 and closed on March 27, 2008. The primary investment objective of the scheme has been to generate capital appreciation and to offer long-term growth opportunities by investing in equity and equity-related securities of companies domiciled in India that are essentially engaged in discovery, development, production, or distribution of natural resources, viz., energy, mining, alternative energy and energy technology sectors. Besides this, last year, DSP Merrill Lynch had launched its first feeder fund in India which invests in gold mining companies through its parent fund Merrill Lynch World Gold Fund. This feeder fund has fetched healthy returns since its inception. Though the fund is only a few months old, the seemingly unstoppable rally in commodity prices and much-anticipated scarcity of resources have enabled DSP to scorch the returns charts, beating most classical equity funds. |
