NRIs: How your investments fared in 2011

2011 has been a tumultuous year for assets around the world. If you are an NRI with significant Indian holdings, here's how your investments fared in the year gone by. We also profile some of the major global indices. But up first, the impact of the falling rupee on your investments.

Rupee

The rupee fell approximately 18% in the last one year (December 16 2010 to December 15 2011). As an NRI, you stand to gain or lose, depending on what you are planning to do with your dollars. If you had sent your dollars to India on December 16 2010 with a plan to remit the money back to the US by the end of 2011, your returns will be lower by 18% simply on account of rupee depreciation.

For instance, if on December 16 2010, you had invested USD 10,000 in an NRO bank deposit in India that gave a 7% interest, you would have remitted Rs 4,53,000 (rupee was Rs 45.3 on December 16 2010) Now, at the end of one year, your deposit would have grown to Rs 4,84,710. But if you remit this money back to the US, at the exchange rate of Rs 53.7 (as of 15 December 2011), you would be remitting just USD 9026. So your gain of 7% from interest on your deposit would have got wiped out by the depreciation of the rupee.

On the other hand, if you are planning to send money to India now, you will get more rupees for every dollar.

BSE Sensex

The BSE Sensex tanked 22% in the last one year. And if we get down to sector indices, there is only one winner - FMCG. The BSE FMCG index ended the year in positive territory - up 12%. Financial Domain Trainer PV Subramanyam explains this phenomenon, "In an uncertain atmosphere, cash gets more respect as compared with 'potential' cash. So companies like Colgate, Gillette and HUL who have more cash are more respected as compared with an infrastructure company that has 'future' cash."

Should you worry about the market fall? If you are a long term investor with a time horizon of more than 5 years, experts continue to believe that equity as an asset class is the best bet to wealth creation.

Investment	Returns (%)
Sensex	-22
BSE FMCG	12
BSE Realty	-47
BSE Auto	-18
BSE Bankex	-27
BSE Capital goods	-45
BSE IT	-13
BSE Healthcare	-11
BSE Oil and Gas	-28

Returns for the one year period ending December 16, 2011

Equity Mutual Funds - India

Equity mutual funds pretty much mirrored the performance of the Sensex. Large cap funds posted negative returns with even the top performers posting returns in the range of -15%. Not surprisingly, FMCG sector funds posted positive returns; in fact, the top performer across all equity funds was the ICICI Prudential FMCG fund.

Investment	Returns (%)
1. ICICI Prudential FMCG	18.00
2. Magnum FMCG	11.77
3. ING Global Real Estate Retail	11.31
4. Birla Sun Life International Equity Plan A	6.60
5. DSPBR World Energy Reg	3.50
Source: Valueresearchonline.com

Returns for the one year period ending December 16, 2011

Debt Mutual Funds - India

Thanks to rising interest rates, the debt category has been a good performer in 2011. The top 5 debt mutual funds gave a return of around 12-15%. But remember that inflation was also high in 2011 - the WPI going up 7.5% from January 2011 to November.

Investment	Returns (%)
1. Sahara Short Term Bond	13.89
2. Tata Fixed Income Portfolio Scheme C3 Reg	12.80
3. Peerless Short Term	12.79
4. Sundaram SD Short-term	12.52
5. Escorts Income	12.23
Source: Valueresearchonline.com

Returns for the one year period ending December 16, 2011

NRO fixed deposits

If you had invested in an NRO bank deposit in January 2011, you would have earned a return of 7.5-8% for a term of one year. However, your deposit would have been locked-in and you probably lost out on gaining from the rising interest rate scenario. By December 2011, banks had increased the interest rate on NRO fixed deposits to over 9%.

Should you withdraw old deposits and invest in newer ones? "You should always withdraw old deposits and make fresh ones. But please worry about tax laws, TDS and withdrawal penalties before you make your decision," Subramanyam advices.

Gold

The Gold story has continued to be a fascinating one. And the quantum of gains from gold investments by NRIs purely depends on where you bought your gold from - India or abroad.

Gold price in dollars moved up 15% during the last one year. But the price in rupees jumped more than 30%, thanks to the depreciation of the rupee against the dollar. Of course, these gains remain notional unless you sell the gold.

Gold continues to be a safe haven and experts recommend 10-15% gold in your portfolio.

Investment	Returns (%)
Gold - Dollar	15.22
Gold - Rupees	34
Gold ETFs - India
1. Reliance Gold ETF	35.50
2. SBI Gold ETS	35.41
3. UTI Gold ETF	35.36
4. Kotak Gold ETF	35.34
5. Quantum Gold ETF	35.32
Source: Valueresearchonline.com

Returns for the one year period ending December 16, 2011

Global indices

If you had invested in global markets, here's how you would have gained or lost depending on which country you placed your bets on.

For all its problems, the US market was the better of the lot. Should you invest more in the US market? "No," says Subramanyam adding, "The steepest rise may be over, now it will be like any other market. Indian market over next 3 years, I guess will give better return for the NRI than the US market - including currency gains - and both places have political risks."

Investment	Returns (%)
Dow Jones	3.2
Nasdaq	-3.32
UK FTSE 100	-8.4
German DAX	-19
French CAC 40	-24
Japan's Nikkei	-19
China's Shanghai	-23
Singapore Straits Times	-16

Returns for the one year period ending December 16, 2011

US Mutual Funds

If you had invested in US mutual funds, and were holding some top notch funds, you probably fared well on returns. Morningstar.com's rankings show that the top performer among funds investing in the US stock market was PIMCO's Real Estate Fund which gave a return of nearly 30% in the last one year. Among the top 5 performers were also 2 funds investing in the utilities sector.

Among bond funds, PIMCO's Extended Duration fund returned 67%. The fund holds nearly 30% in long term treasuries of 30 year duration.

But in case of both these fund classes, it is important to remember that good returns were limited to the top performers. The category average in case of equity funds (US stocks) was -4% and of bond funds was about 6%.

Top 5 Equity MFs in US (source: Morningstar.com)

Investment	Returns (%)
PIMCO Real Estate Real Return Strategy A	29.46
PIMCO StocksPLUS Long Duration Instl	21.98
FBR Gas Utility Index Investor	21.47
ProFunds Utilities UltraSector Inv	20.59
ProFunds Pharmaceuticals UltraSector Inv	18.05

Returns for the one year period ending December 16, 2011

Top 5 Bond Funds in US (source: Morningstar.com)

Investment	Returns (%)
PIMCO Extended Duration Instl	67.25
Vanguard Extended Dur Treas Idx Instl	67.03
ProFunds US Government Plus Inv	52.14
Rydex Govt Long Bond 1.2x Strategy Inv	50.34
Wasatch-Hoisington US Treasury	49.03

Returns for the one year period ending December 16, 2011

UK Mutual Funds

For those who invested in UK domiciled mutual funds here's a snapshot of performance. According to Morningstar.co.uk, here is a ranking of the top 5 Large-Cap Growth Equity funds based on one year returns:

Top 5 Large-Cap Growth Equity Funds in UK (source: Morningstar.co.uk)

Investment	Returns (%)
Liontrust UK Growth Inst Inc	4.15
Liontrust UK Growth Inc	3.04
Artemis UK Growth fund	-5.04
BlackRock UK Specialist A Inc	-6.07
BlackRock UK Specialist A Acc	-6.09

Returns for the one year period ending December 16, 2011

Small cap funds have done well in the UK. Here's a snapshot:

Top 5 Small-Cap Equity Funds in UK (source: Morningstar.co.uk)

Investment	Returns (%)
CF Octopus UK Micro cap Growth	10
Liontrust Special Situations Inst Inc	8.53
Marlboro UK Micro Cap	6.85
Liontrust Special Situations Inc	6.48
Artemis UK smaller companies	3.61

Returns for the one year period ending December 16, 2011