Will PGIM India Global Select Real Estate Securities FoF Be Meaningful to Invest?
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Real Estate continues to remain an asset class where retail investors are under-allocated. A real estate dedicated fund allows you to take meaningful exposure in this asset class. A traditional portfolio of equity and bonds can be complemented by adding real estate, as it can help you in diversifying the portfolio further.
Global Real Estate represents opportunities in various sub-sectors that are either not available in India and/or do not have the global scale and depth. Mutual Fund REITs offer investors with diversification towards real estate related investments in their portfolio and can potentially offer both capital appreciation as well as income generation opportunities in the real estate segment.
The Global Real Estate fund of fund (FoF) portfolio can provide investors with additional geographical diversification benefits. Real estate forms the third largest component of portfolios in developed markets, whereas it is negligible in the Indian context. It provides diversification beyond the traditional stock/bond combination for your portfolio.
PGIM India Mutual Fund has launched PGIM India Global Select Real Estate Securities FoF, an open-ended equity fund of fund (FoF) scheme investing in PGIM Global Select Real Estate Securities Fund.
On the launch of this fund, Mr Ajit Menon, CEO, PGIM India Mutual Fund, said "It is our endeavour to bring relevant and timely investment ideas to Indian investors and advisors. We are, therefore, proud to present our parent PGIM's global expertise in this asset class. Its various sub-themes like grade A commercial, self-storage, logistics, last-mile retail, senior living, cold storage, etc. are either not available in India or not available at scale as investible securities compared to global markets. With interest rates and inflation where they are today, this strategy will be an important addition to build resilience in the clients' portfolios for times ahead."
In addition, Mr Rick Romano, MD at PGIM Real Estate and Head of Global Real Estate Securities Business, said "Today's investment opportunities span a wide range of categories, including capitalising on favourable occupier momentum linked to accelerated changes in how real estate is used, investing in assets that require some short-term repositioning and finding value in parts of the market that have undergone a long-term correction. As concerns around new variants of COVID ease, allowing workplaces and service-oriented industries to reopen more fully, occupier sentiment is expected to return quickly supporting a rebound in real estate space demand."
Table 1: Details of PGIM India Global Select Real Estate Securities FoF
| Type |
An open-ended equity fund of fund scheme investing in PGIM Global Select Real Estate Securities Fund. |
Category |
Fund of Fund (Overseas) |
| Investment Objective |
The primary investment objective of the Scheme is to generate long term capital appreciation from investing in the units of PGIM Global Select Real Estate Securities Fund, which primarily invests in REITs and equity and equity related securities of real estate companies located throughout the world. However, there can be no assurance that the investment objective of the Scheme will be achieved. The Scheme does not guarantee/ indicate any returns. |
| SIP/STP/SWP |
Available |
| Min. Investment |
Rs 5,000/- and in multiples of Re 1/- thereafter. Additional Purchase Rs 1,000/- and in multiples of Re 1/- thereafter. |
Face Value |
Rs 10/- per unit |
| Plans |
|
Options |
- Income Distribution cum Capital Withdrawal (IDCW-Payout)
- Income Distribution cum Capital Withdrawal (IDCW-Reinvestment)
|
| Entry Load |
Not Applicable |
Exit Load |
- 10% of the units allotted may be redeemed/switched-out to debt schemes/PGIM India Arbitrage Fund without any exit load within 90 days from the date of allotment;
- Any redemptions/switch-outs in excess of the abovementioned limit would be subject to an exit load of 0.50%, if the units are redeemed/switched-out to debt schemes/PGIM India Arbitrage Fund within 90 days from the date of allotment of units;
- Nil - If the units are redeemed/ switched-out after 90 days from the date of allotment of units;
- No exit load will be charged for switches and STP between any open-ended equity scheme, hybrid scheme (except PGIM India Arbitrage Fund) and fund of funds scheme.
|
| Fund Manager |
Mr Ravi Adukia |
Benchmark Index |
FTSE EPRA/NAREIT Developed Index |
| Issue Opens: |
November 15, 2021 |
Issue Closes: |
November 29, 2021 |
(Source: Scheme Information Document)
The investment strategy for PGIM India Global Select Real Estate Securities FoF is as follows:
PGIM India Global Select Real Estate Securities FoF will predominantly invest in units of PGIM Global Select Real Estate Securities Fund. It seeks to achieve its objective through investments primarily in equity and equity related securities of real estate companies located throughout the world.
The underlying fund will invest in common and preferred stocks, real estate investment trusts ("REITs") and preferred REITs, real estate operating companies, exchange traded funds, depository receipts (which are securities issued by a financial institution with evidence ownership interests in a security or a pool of securities deposited with the financial institution), rights (securities giving shareholders entitlement to purchase new shares issued by a company at a predetermined price in proportion to the number of shares already owned) and warrants (derivative securities that give the holder the right to purchase securities from the issuer at a specific price within a certain time frame).
The Investment strategy takes a value-oriented approach to investing, based upon assessments of the fundamental value of real estate assets and of the performance and record of management teams of real estate companies.
The fund manager analyses the quality of real estate asset cash flows and sustainability and growth of company dividends while evaluating a company's strategy, management track record of delivering high returns on equity, alignment of interest, and an assessment of their ability to continue to outperform the market.
Being a fund of fund, it will be passively investing in the units of underlying scheme within the investment pattern, thus allowing Indian investors to diversify their risk from a single country and single currency investment.
(Source: Scheme Information Document)
Under normal circumstances, the asset allocation will be as under:
Table 2: Asset Allocation for PGIM India Global Select Real Estate Securities FoF
| Instruments |
Indicative Allocation (% of net assets) |
Risk Profile |
| Minimum |
Maximum |
High/Medium/Low |
| Units/securities of PGIM Global Select Real Estate Securities Fund, domiciled in Ireland |
95 |
100 |
Medium to High |
| Debt Instruments including Government Securities, Corporate Debt, Money Market Instruments, (including cash and units of mutual funds) |
0 |
5 |
Low to High |
(Source: Scheme Information Document)
Who will manage PGIM India Global Select Real Estate Securities FoF?
Mr Ravi Adukia will be the dedicated fund manager for this scheme.
Mr Ravi Adukia is Fund Manager - Overseas Investments at PGIM India Asset Management Pvt. Ltd. He is a CFA, CA, and CS with an overall experience of 15 years in Indian financial markets, primarily in equity research. Prior to this, he was associated with Nomura Financial Advisory & Services India (P) Ltd. as Vice President (Equities), Irevna Research Services (P) Ltd (Unit of Crisil Ltd) as Manager (Research).
The other schemes Mr Adukia manages are PGIM India Global Equity Opportunities Fund, PGIM India Emerging Markets Equity Fund, PGIM India Balanced Advantage Fund, PGIM India Flexi Cap Fund, PGIM India Hybrid Equity Fund, and PGIM India Small Cap Fund
Fund Outlook - PGIM India Global Select Real Estate Securities FoF
PGIM India Global Select Real Estate Securities FoF will invest in units of PGIM Global Select Real Estate Securities Fund, which is a global fund investing in real estate investment trusts (REITs) across different parts of the world.
The scheme will invest in units of the underlying fund that provides investment opportunities beyond traditional Commercial or Residential Property. The underlying fund will give investors' portfolios exposure across the U.S., European, and Asia Pacific real estate markets among other regions, to find potential opportunities around the world.
The underlying scheme has a value-oriented real estate investment focus, based on real estate fundamental research and bottom-up security selection. It endeavours real-time access to proprietary private real estate market information, with rigorous focus on risk-management in security selection and the investment process.
However, being a fund of fund, this scheme will be passively managed and it will limit fund managers involvement. The scheme will be indirectly investing a major portion of its portfolio in international real estate markets with the existing REITs fund, which makes it a bit risky proposition. In addition, due to overseas investments, this scheme will be prone to geo-political risk and currency fluctuation risk.
The scheme is suitable only for investors with a very high risk appetite and a long investment horizon. You must ensure that your investment objectives are well-aligned with the fund.
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Warm Regards,
Mitali Dhoke
Jr. Research Analyst
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