International mutual funds in India open doors to global markets for Indian investors. These funds invest in foreign stocks, bonds, or funds, offering diversification beyond domestic markets. With India’s mutual fund AUM hitting ₹68 lakh crore in 2024, per AMFI, global exposure is gaining traction. What are the types and benefits? Let’s explore.
Types: Country and Regional Funds
These mutual funds in India include country-specific funds, like those tracking the US Nasdaq 100, and regional funds, covering areas like Europe or Asia. For example, Motilal Oswal Nasdaq 100 FoF targets US tech giants like Apple. Regional funds, such as Edelweiss ASEAN Equity Off-shore Fund, tap emerging markets like Indonesia. These funds let you bet on specific economies, but require research into political and economic stability.
Types: Global and Thematic Funds
Global funds, another type of international mutual funds, invest across multiple countries, reducing reliance on one market. DSP Global Innovation FoF, for instance, targets worldwide tech disruptors. Thematic funds focus on sectors like healthcare or ESG, picking global leaders. In 2024, global funds averaged 14% returns, outperforming many Indian equity categories, per The Financial Express. However, they face currency risks.
Benefits: Diversification and Growth
These mutual funds in India shine for geographic diversification. When Indian markets dip—as they did in 2024 amid FII outflows—global markets may rise, balancing your portfolio. They also tap high-growth firms like Google or Tesla, unavailable locally. Plus, rupee depreciation boosts returns; a falling rupee against the dollar lifts NAVs. In addition, professional fund managers handle complex global picks, saving you time.
Considerations Before Investing
Despite benefits, these mutual funds in India carry risks. Currency fluctuations can cut gains if the rupee strengthens. Geopolitical issues or foreign regulations also adds uncertainty. Income from these mutual funds may be subject to double taxation. Investors should compare the expense ratios of different funds to ensure cost-effectiveness.
Conclusion:
International mutual funds offer Indian investors a valuable opportunity to diversify their portfolios and gain exposure to global markets. By carefully selecting the right type of fund and considering personal investment goals and risk tolerance, investors can enhance their chances of achieving long-term financial success.
– Ketaki Dandekar (Team Arthology)
Read more about International Mutual Funds here – https://www.investopedia.com/international.asp