Nippon India Taiwan Equity Fund, launched in December 2021, has faced challenges since its inception, with its net asset value (NAV) mostly trading below the issuance NAV of 10 INR.As of 2nd June 2023, the fund’s NAV stands at 8.47, with an assets under management (AUM) of 527 crores. The fund holds approximately 10% in cash and has invested 90% in overseas equities
Performance:
The fund’s NAV hit its lowest point of 5.5 per unit on 25th October 2022 but has since been on a recovery trajectory. You can refer to the historical NAV movement on the following link: Moneycontrol Nippon India Taiwan Equity Fund NAV
https://www.moneycontrol.com/mutual-funds/nav/nippon-india-taiwan-equity-fund-rp-/MRC2903
Investment Strategy:
The fund focuses on diversification and invests in the high-end technology manufacturing sector, taking advantage of Taiwan’s expertise and the fast adoption of 5G technology. The anticipated demand for chips in 5G-enabled devices is considered a tailwind for Taiwanese companies.
https://www.youtube.com/watch?v=9UC8lL2DczU
Currency Risk and Geopolitical Tensions:
Investors need to be aware of the currency risk associated with investing in overseas equity funds denominated in New Taiwan Dollar (NTD) compared to the Indian Rupee (INR). The last 10 years have seen nearly a 40% depreciation of INR against NTD, with a 1.50% depreciation within the past year. Additionally, the geopolitical tensions between China and Taiwan should be taken into account.
https://www.xe.com/currencycharts/?from=TWD&to=INR&view=10Y
China-Taiwan Conflict:
The conflict between China and Taiwan stems from historical and political differences. China considers Taiwan as part of its territory and has not ruled out the use of force to bring it under its control. Taiwan, however, operates as a separate democratic entity with its own government, military, and foreign relations. The relationship between the two has been complex, with China attempting to isolate Taiwan diplomatically and conducting military exercises near its borders.
Conclusion:
This article provides information on the Nippon India Taiwan Equity Fund’s performance, investment strategy, and associated risks, including currency risk and geopolitical tensions. It is important to conduct your own due diligence and seek advice from a registered investment advisor before making any investment decisions. The article is for educational purposes only and does not constitute a recommendation to buy or sell.
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