Investing Trends

A good offering in footing of lesser volatility and better tax returns than fixed income instruments.

The first inquiry which one inquires today, when they see a planetary real property monetary fund is… what about the subprime crisis? Well, the ING Global Real Number Estate monetary fund makes not put in the United States lodging sector. Now that the basic fearfulness have been set to rest, let's look at the other qualities of this fund.

Launched in December 2007, ING Global Real Number Estate monetary fund is an open-ended fund of finances that suggests to put in planetary places in 21 countries. This monetary fund is benchmarked against the Citigroup World Place Index.

It mopped up around Rs 218 crore in the new monetary fund offering (NFO). Its nett plus value (NAV), as on February 28, stand ups at 10.06. Globally the ING grouping is the world's biggest existent estate investing director with assets under direction (AUM) being stopping point to US$145 billion.

Real estate, as an plus class, have already provided phenomenal tax returns in the last few years, but now the going expressions tough. The logic of investing in planetary existent estate is to have got an investment avenue that is insulated from the Indian equities or chemical bonds market.

Being a monetary fund of funds, ING Global Real Number Estate makes not put directly in properties. This investing theoretical account lets it to set money in existent estate investing trusts (REITs) and existent estate operating companies (ROCEs).

These are physical things which build, ain and run existent estate places such as as apartments, shopping centres, hotels, malls, wellness attention installations and others.

The primary incomes of REITs come up from leases and sedimentations from the owned properties. To measure up as a REIT, a company have to compulsorily administer 90 per cent of the income as dividends and they bask taxation benefits against that.

REOCs, on the other hand, gain their incomes from leases and deposits, as well as from sale of properties. The option to administer dividends is voluntary.

Another inquiry which chases an investor while investment in a monetary fund of this type, is the hazard of exposure to currency fluctuations. The monetary fund counters this by claiming that it put in different securities in local currencies.

Therefore, when the United States dollar weakens, some other currency like the Nipponese hankering or the Australian dollar may appreciate against it. This levels out the fluctuations to a great extent.

The mentality on place in the United States and Continental Europe is inexorable for the adjacent couple of years. However, place marketplaces in the Asia Pacific Ocean region, Hong Kong, China, Commonwealth Of Australia and Capital Of Singapore are supposed to do better.

If the international existent estate marketplace slacks additional it might be an opportune clip to acquire into this fund. Lease incomes will also supply stable hard cash flowings for the monetary fund to gain a sensible return.

If a retail investor desires to acquire into the international place bandwagon and desires liquidness too this monetary fund is a good option. However, expression at it as a pure variegation play, with tax returns expected to beat out fixed income and less volatility than equities.

As far as taxation constituent goes, this monetary monetary fund of finances is treated like a debt fund and taxed accordingly. As per current taxation laws, long-term capital additions will have got the benefit of indexation and taxed at 20 per cent plus surcharge. The short-term capital additions will be added to the sum income of the investor and taxed according to the income bracket.

The author is head, common funds, Derivium Capital and Securities