Regional / Thematic

Be it Asia’s Tiger Economies which recorded stunning economic growth between the early 1960s and 1990s, or the “BRICS” club comprising Brazil, Russia, India, China and South Africa that attracted wide-spread attention in the early 2000s, investors always have had a fascination with region-based investing narratives.

• The desire to ride the “next big thing” – essentially hoping to generate superior returns by gaining exposure to a fast-growing region – remains, thus explaining the persisting demand and popularity of so-called “regional funds”.
• These investment vehicles are typically mutual funds that invest almost exclusively in the securities of companies – spanning various sectors – based in a region. A regional fund for Indian subcontinent, for instance, will have a mandate to place bets on Indian and neighboring investing assets only, such as local listed equities, sovereign debt, corporate loans, etc.
• While such an overwhelming concentration of the portfolio in a single region can potentially generate high returns, such a strategy also has to contend with price volatility and economic, political and business risks associated with the given area.