We are just 35% up from 2008 high To understand the Dollex, let us take a hypothetical situation. Assume that the Sensex was at 40,000 in January and has now grown to 50,000 in December. That is a phenomenal 25% appreciation in the Sensex and if you are an Indian investor you would be extremely happy. However, if you are a foreign portfolio investor or FPI, you also worry about the rupee/dollar exchange rate. That is because, for the foreign investor to realize the 25% gains on the Nifty, the rupee must have remained stable. However, if during this period the rupee had depreciated by 15% from Rs.70/$ to Rs.80.50/$, then the returns of the foreign investor would have been substantially lower. This currency impact is captured by the Dollex.
Now let us use this example to understand what is Dollex? The Dollex captures these dollar-adjusted returns. Let us break up the above illustration. In the above case, Sensex returns would be 25% {(50,000-40,000) / 40,000}. That is quite straight forward and that is the returns that your Sensex would show. Here is how Dollex would be calculated. Dollar infusion in January = 40,000/70 = $571.43. At the time of redemption, it is 50,000/80.50 =$621.12. In this case, the Dollex Returns would be 621.12/571.43 = 8.7%. That is a tad shocking. How did 25% returns become just 8.7%? That is because during this interim period, the rupee had depreciated by 15% resulting in the dollar returns reducing substantially. This dollar impact is captured by the Dollex. We shall look at the S&P BSE Dollex 30 in greater detail.
