Diversify your portfolio with bullish Chinese equities through Indian mutual funds: Details

Investing in the Chinese stock markets has become an attractive option for many Indian investors looking to diversify their portfolios and tap into the fast-growing economies of China, Hong Kong, and Taiwan. Through Indian mutual funds, investors can easily access this market without the complexities of directly investing in foreign stocks. Two notable funds that offer exposure to the Greater China region are the Edelweiss Greater China Equity Offshore Fund Direct-Growth and the Axis Greater China Equity Fund of Fund (FoF) Direct Growth. Here's how you can invest in Chinese stocks through these mutual funds.

Edelweiss Greater China Equity Offshore Fund Direct-Growth

The Edelweiss Greater China Equity Offshore Fund primarily invests in equities of Greater China, which includes the stock markets of China, Hong Kong, and Taiwan. This fund primarily invests in the JPM Greater China-1-12 USD index, giving Indian investors exposure to high-growth sectors like technology, consumer goods, and financial services.

With a fund size of Rs. 1,474.10 Crores and a minimum SIP amount of just Rs. 100, this fund provides an affordable entry point for investors. Over the past year, it has delivered impressive returns of 20%, demonstrating the potential for significant long-term capital appreciation. However, it is essential to note that the Chinese market can be volatile, which is why Edelweiss's fund targets long-term growth, making it suitable for risk-tolerant investors. The fund charges an expense ratio of 1.4%, which is a relatively common rate for international equity funds.

Axis Greater China Equity FoF Direct Growth

The Axis Greater China Equity Fund of Fund (FoF) offers a slightly different approach. Instead of directly investing in Chinese stocks, it invests in the Schroder International Selection Fund Greater China X Accumulation, a foreign fund that targets equities in China, Hong Kong, and Taiwan. The Axis Fund’s objective is also long-term capital appreciation, but it does so by keeping some exposure in liquid assets and debt instruments to manage liquidity.

With a smaller fund size of Rs. 254.70 Crores, the Axis Greater China Equity FoF Direct Growth provides a more cost-effective investment option with an expense ratio of just 0.54%, making it more affordable for investors. The fund’s returns have been strong as well, delivering 12% in the last six months and 17.58% in the last year.

How to Invest in These Funds

Both these funds are accessible through the regular channels of mutual fund investments in India. To begin, you can invest in them through:

Direct Investment via AMC Website: You can visit the fund’s Asset Management Company (AMC) website and open an account for direct investment. This option avoids intermediaries, keeping your costs lower.

Through SIP (Systematic Investment Plan): These funds offer an affordable entry point via SIPs. You can start with as little as Rs. 100, making it easier to begin your investment journey, especially for first-time investors. The SIP option is beneficial for long-term investors as it helps in averaging the purchase cost and reducing market volatility risks.

Third-party Platforms: You can also invest through third-party platforms like Groww, Zerodha, or ET Money, which allow you to invest in a wide range of mutual funds from various AMCs, including Edelweiss and Axis.

Risk and Return

Investing in foreign markets, especially one as dynamic and unpredictable as China, comes with inherent risks. While these funds have shown impressive returns in the past, it’s important to remember that international markets can fluctuate due to various factors, such as geopolitical issues, regulatory changes, and market conditions.

However, for those willing to take on the risk, investing in the Edelweiss Greater China Equity Offshore Fund Direct-Growth or the Axis Greater China Equity Fund of Fund offers a gateway to one of the most promising regions in the world. Diversifying into the Chinese stock markets through these funds can provide you with exposure to high-growth industries, potentially boosting your overall investment returns.

Indian investors looking to tap into the booming Chinese stock markets can do so easily by investing in these mutual funds, thereby diversifying their portfolios and benefiting from the growth potential of the Greater China region.