Investing in mutual funds has become a popular way to grow wealth in India. Mutual funds provide an opportunity for investors to diversify their portfolio and invest in a variety of assets. However, investing in domestic mutual funds can limit the diversification of your portfolio. This is where global mutual funds come into play.
What are Global Mutual Funds?
Global mutual funds are funds that invest in stocks, bonds, and other assets in markets outside India. These funds are managed by fund managers who have expertise in investing in international markets. Investing in global mutual funds provides an opportunity for Indian investors to diversify their portfolio across different geographies and sectors.
Why Should You Invest in Global Mutual Funds?
Diversification: Investing in global mutual funds provides an opportunity to diversify your portfolio across different countries and sectors. This reduces the risk of investing in a single asset class or region.
Access to International Markets: Investing in global mutual funds provides an opportunity to invest in markets that are not available in India. For example, if you want to invest in the technology sector, investing in a global mutual fund provides access to companies like Apple, Microsoft, and Amazon.
Currency Exposure: Investing in global mutual funds provides exposure to different currencies. This can be beneficial in times of currency fluctuations. For example, if the Indian rupee depreciates against the US dollar, an investor investing in a global mutual fund that invests in US stocks will benefit.
Professional Management: Global mutual funds are managed by experienced fund managers who have expertise in investing in international markets. These fund managers have a deep understanding of the global markets and can make informed investment decisions.
Tax Benefits: Investing in global mutual funds provides tax benefits. Long-term capital gains from global mutual funds are taxed at 20% with indexation. This is lower than the tax on long-term capital gains from domestic mutual funds, which are taxed at 20% with no indexation.
How to Invest in Global Mutual Funds?
Investing in global mutual funds is easy. You can invest in global mutual funds through any mutual fund distributor or online platform. Some of the popular global mutual funds available in India include Franklin India Feeder – Franklin US Opportunities Fund, ICICI Prudential US Bluechip Equity Fund, and Motilal Oswal Nasdaq 100 Fund of Fund.
Conclusion
Investing in global mutual funds provides an opportunity for Indian investors to diversify their portfolio and invest in markets outside India. These funds are managed by experienced fund managers who have expertise in investing in international markets. Investing in global mutual funds provides exposure to different currencies, access to international markets, and tax benefits. However, it is important to understand the risks associated with investing in international markets and do your research before investing.
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Frequently Asked Questions (FAQs)
Q: What are global mutual funds?
A: Global mutual funds are mutual funds that invest in stocks, bonds, and other assets in markets outside India. These funds are managed by fund managers who have expertise in investing in international markets.
Q: What are the benefits of investing in global mutual funds?
A: Investing in global mutual funds provides an opportunity to diversify your portfolio across different countries and sectors, access to international markets, currency exposure, professional management, and tax benefits.
Q: Are global mutual funds riskier than domestic mutual funds?
A: Investing in global mutual funds comes with its own set of risks. Investing in international markets exposes investors to geopolitical risks, currency fluctuations, and regulatory risks. However, investing in global mutual funds provides an opportunity to diversify your portfolio and manage risk.
Q: How do I invest in global mutual funds?
A: Investing in global mutual funds is easy. You can invest in global mutual funds through any mutual fund distributor or online platform. Some popular global mutual funds available in India include Franklin India Feeder – Franklin US Opportunities Fund, ICICI Prudential US Bluechip Equity Fund, and Motilal Oswal Nasdaq 100 Fund of Fund.
Q: Do I need to have a demat account to invest in global mutual funds?
A: No, you do not need to have a demat account to invest in global mutual funds. You can invest in global mutual funds through a mutual fund distributor or online platform.
Q: What is the tax treatment for global mutual funds in India?
A: Long-term capital gains from global mutual funds are taxed at 20% with indexation. This is lower than the tax on long-term capital gains from domestic mutual funds, which are taxed at 20% with no indexation. However, short-term capital gains from global mutual funds are taxed at the same rate as domestic mutual funds, which is based on the investor’s tax bracket.
Q: Can NRIs invest in global mutual funds in India?
A: Yes, NRIs can invest in global mutual funds in India. However, they need to follow the guidelines set by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) for investing in mutual funds.
