In tune with global markets where investors use Inflation Index Bonds or linkers to protect their investments from inflation, the Image may be NSFW.
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Government of India announced last year, the launch of Inflation Indexed Bonds (IIBs).
Given persistently high inflation in India,Inflation Indexed Bonds offer investors inflation protection on both principal as well as interest payments.
DWS Inflation Indexed Bond Fund will invest in Inflation Index Bonds. These are predominantly issued by the Government of India. The Fund is an open ended debt fund and will predominantly invest in these securities with the intention of delivering above inflation returns to investors. The returns are therefore linked to inflation rate.
As per the last RBI auction in Dec 2013, WPI (Wholesale Price Index) linked IIIBs are currently yielding 3.6% above WPI, whereas WPI itself is currently at 7.5% (as on Nov 30, 2013). This makes IIBs very attractive for investors. Over the last 10 years, average WPI inflation in India was 6.7%.
The Fund also aims to benefit from the accrual income and potential capital appreciation from IIBs. By investing through the mutual fund route, investors have the added benefit of ease of investment and liquidity along with tax efficient returns. The benchmark for the fund is I-Sec Composite Index.
DWS Top Euroland Offshore Fund
DWS Euroland offshore fund is an open ended overseas fund of funds with an excellent track record. Euroland is at the heart of Europe and home to many world-class European companies. Since June last year, the Euroland has witnessed signs of economic recovery and many companies in Euroland are expected to benefit from the same.
Euroland represents 20% of the global GDP and 75% of the pan European GDP. Euroland is made up of 18 European countries and a common currency. The economic scenario in Euroland suggests that fiscal drag is easing, while early indicators are signaling strong improvement in growth. Corporate earnings are significantly below previous peak,offering a lot of recovery potential. Compared to US equity markets, cyclical adjusted Euroland company PEs are at low levels. These indicators seem to suggest a potential upside for Euroland.
The benchmark for the underlying fund is Euro Stoxx 50. The underlying fund has given CAGR returns in last 1 year of 49.91% v/s benchmark returns of 42.88% as on Dec 30, 2013. Similarly it gave following returns: Over last 3 years 24.78% returns v/s benchmark returns of 20.58%; over last 5 years 20.76% returns v/s benchmark returns of 13.31%. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments.
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