Thursday, September 29, 2011 20:13 Hrs IST
DSP BlackRock World Agriculture Fund Floats On
NFO period is from 30 September 2011 to 14 October 2011
DSP BlackRock Mutual Fund has unveiled a new fund named as DSP BlackRock World Agriculture Fund, an open ended fund of funds scheme investing in international funds. The Scheme is a fund of funds Scheme investing predominantly into the BlackRock Global Funds World Agriculture Fund, which invests in equity securities of agricultural companies globally. These are companies that form a part of the upstream and midstream portion of the value chain in the agriculture sector and operate across various geographies around the world. The New Fund Offer (NFO) price for the scheme is Rs 10 per unit. The new issue will be open for subscription on 30 September and close subscription on 14 October 2011.
The investment objective of the scheme is to seek capital appreciation by investing predominantly in the units of BlackRock Global Funds World Agriculture Fund (BGF WAF). The Scheme may, at the discretion of the Investment Manager, also invest in the units of other similar overseas mutual fund schemes, which may constitute a significant part of its corpus. The Scheme may also invest a certain portion of its corpus in money market securities and/or money market/liquid schemes of DSP BlackRock Mutual Fund (Fund), in order to meet liquidity requirements from time to time.
The scheme offers two options viz. growth and dividend option. Dividend option will have dividend payout and reinvest options.
The scheme will invest 95%- 100% of assets in Units of BGF WAF (in the shares of BGF WAF, Undertaking for Collective Investment in Transferable Securities (UCITS) III fund) or other similar overseas mutual fund scheme(s). The scheme shall also invest upto 5% in Money market securities and/or units of money market/liquid schemes of DSP BlackRock Mutual Fund.
The minimum application amount is Rs 5000 and in multiples of Re 1 thereafter.
Entry load charge will be nil for the scheme. Exit load will be:
Holding period < 12 months: 1.00 %
Holding Period > = 12 months: Nil
Mr. S. Naganath, President and Chief Investment Officer, said, Agriculture is a sector represented globally, which has sound fundamentals over the long term, given the rising imbalance between food demand and supply. We believe that agriculture is an investment opportunity with the potential for growth over a long term investment horizon. DSP BlackRock Investment Managers already has a suite of products in the international fund of funds category such as the DSP BlackRock World Gold Fund, DSP BlackRock World Mining Fund and the DSP BlackRock World Energy Fund. We feel that the DSP BlackRock World Agriculture Fund is another such diversification opportunity for Indian investors looking to access leading global and emerging agricultural companies.
DSP BlackRock World Agriculture Fund provides Indian investors with a unique investment opportunity to benefit from the potential growth prospects in the agriculture sector by investing into agricultural companies globally through international funds. The unique features of this Scheme are:
Low correlation of the agriculture sector of 0.6 with Indian equities (Data considered: Monthly returns of DAX Global Agribusiness Index v/s BSE100 Index from Oct 31, 2001 till Aug 31, 2011).
Provides access to leading global and emerging agricultural companies through international funds.
The scheme provides investors the opportunity for global diversification combined with access to the fundamentals of the agriculture sector and the growth potential of equities.
The team at BlackRock, responsible for BlackRock Global Funds World Agriculture Fund belongs to one of the stronger Natural Resources Teams in the industry, managing around US$ 47.2 billion in assets as on Mar 31, 2011.
BlackRock Global Funds World Agriculture Fund leverages on the fund managers' investment experience in the agricultural space and the commodities sector.
Areas into which this scheme invests
DSP BlackRock World Agriculture Fund will invest into the BlackRock Global Funds World Agriculture Fund and other similar overseas mutual fund schemes, and will provide investors with access to the fundamentals of the agriculture sector.
BlackRock Global Funds World Agriculture Fund invests mostly in the equity securities of companies which belong to the following investment themes: Agricultural Science Companies, Fertilizers, Agricultural Equipment, Agribusiness, Food Processors, Land & Farming, Forestry etc.
Key drivers in the Agriculture sector
The agricultural cycle is often characterized by rising commodity prices driven by imbalance between food supply and demand.
The main drivers of demand in the agriculture sector are: a rise in global population which is driving food demand upwards; the rising affluence of urban population leading to an improvement in diet which increases the demand for proteins and the growth of the biofuel sector. The main drivers of supply in the agriculture sector are: The decline in the availability of arable land and a slowdown in the crop yield growth and hence a gradual decline in inventory, which results in a market that is more prone to supply shocks from adverse climatic conditions or government intervention in the global grains trade
This imbalance between demand and supply will likely cause a rise in commodity prices, which in turn will drive the increase in global farm incomes and provide farmers with the incentive to improve productivity. Companies providing goods and services to farmers would benefit from the likely investment cycle in the global farming sector. Rising grain prices lead to sound farm economics and a strong economic case for farmers to improve productivity on a global scale.