Investors who bought units of the ?fund-of-fund' scheme of Fidelity Global Real Assets can stay invested with the fund. Launched at a time when inflation figures spelt the first sign of trouble, the fund has kept its promise of investing in hard assets that have helped ?inflation-proof' one's portfolio. It returned 31 per cent since its launch in January 2010, beating its customised benchmark's return of 25 per cent. However, it is evident that the bounce-back in developed markets such as the US, especially in the last six months, has largely driven the fund's performance. Investors may, therefore, wait for the fund to build a long-term track record across different market phases before going for fresh exposures.

Fund strategy : Fidelity Global Real Assets is a feeder fund and therefore redirects its fund collections to Fidelity International's?Global Real Asset Securities Fund (underlying fund).??

While in the Indian context real assets are typically associated with property and gold, the fund has a wider definition which includes assets such as oil-wells, metals and mines, infrastructure, utilities and commodities, besides land and building. This essentially means that the fund will focus less on intangible assets and services.

The fund offers a few advantages vis-?-vis exposure to a similar universe locally: one, it can invest in real assets in the form of stocks that are not available in the Indian space. For instance, opportunities to invest in a Real Estate Investment Trust or an aircraft manufacturing company may be hard to come by locally. The global ?hard assets' mandate has therefore widened the investment opportunities.

Two, given the more diverse nature of the theme the fund's performance is unlikely to be merely driven by a commodity or resource cycle; to this extent its performance is likely to be less cyclical when compared with typical commodity theme funds.

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Portfolio and returns : The underlying fund's portfolio in the last year has largely remained overweight on sectors such as energy, industrials, materials and real estate. Stocks such as Exxon Mobil, Royal Dutch Shell, General Electric, United Technologies (defence and aerospace) are some of the top holdings in the fund's January portfolio.

While the firming crude has largely buttressed the rally in the oil stocks in the portfolio, the revival in sectors such as capital goods and real estate has also helped the company notch up handsome gains .

It is noteworthy that it is the fund's high exposure to the US (32 per cent at present) that has largely driven returns. The Nasdaq, for instance, returned 28 per cent in the last six months alone, against the 3.4 per cent decline in the Sensex. The improving sentiment in the US, backed by key economic data, has also to a large extent driven this developed market.

Over the past year, the fund has beaten other international themes available through domestic markets ? DSPBR World Energy, DSPBR World Mining as well as agri and precious metal themes from the Birla Sun life stable. However, it underperformed funds that invest in gold stocks by 2-7 percentage points.?

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