SHOULD ONE INVEST IN MNC FUNDS?

WHEN I started investing post qualifying as a chartered accountant in the early 1990s, shares of multi-national companies like Pfizer, Glaxo, Hindustan Lever, Colgate and Castrol were glittering stars at the bourses and it is no surprise that they continue to do well in their present avatars even today, three and a half decades down the line.

- - ASHOK KUMAR

Today, some mutual fund houses offer investors the option of Multi-National Companies Funds (MNC Funds). They are thematic equity MFs that focus on international companies that are publicly listed and have a significant degree of foreign ownership as well as overseas business activities. Some of the positives that have historically driven investors to MNC stocks and funds are their strong brand equity, capital structure, cash flows and ROE besides low debt. There are inbuilt corporate checks and balances that provide these companies the opportunity to deliver strong performances.

MNC Fund managers practice a bottom up approach to build portfolios, using consistent parameters for selection.