Investing in international mutual funds is an excellent way to diversify your investment portfolio and gain exposure to international markets. The Indian mutual fund industry offers a wide range of international mutual funds that allow investors to invest in various geographies and sectors across the globe. In this blog, we will discuss the best international mutual funds in India.
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What are international mutual funds?
International mutual funds invest in foreign stocks and securities, giving investors exposure to international markets. These funds can invest in a single country, a specific region, or a broad range of markets. They offer diversification benefits, and investors can benefit from the growth potential of international markets.
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Why invest in international mutual funds?
Investing in international mutual funds has several benefits. Firstly, it allows investors to diversify their portfolio and reduce their overall risk. Secondly, it offers access to high-growth markets that may not be available in the domestic market. Thirdly, it helps in currency diversification, as investments are made in foreign currencies, which can help in reducing currency risk.
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Best international mutual funds in India
a) Franklin India Feeder Franklin US Opportunities Fund The Franklin India Feeder Franklin US Opportunities Fund is a top-performing international mutual fund in India. It invests in the US markets and has generated excellent returns over the years. The fund focuses on large-cap companies, and its portfolio is well-diversified across sectors. This fund is suitable for investors looking for exposure to the US markets.
b) ICICI Prudential US Bluechip Equity Fund The ICICI Prudential US Bluechip Equity Fund is another popular international mutual fund in India. The fund invests in blue-chip US companies and has a diversified portfolio across sectors. The fund has consistently outperformed its benchmark, and its long-term track record is impressive. This fund is suitable for investors looking for a long-term investment horizon.
c) DSP BlackRock World Gold Fund The DSP BlackRock World Gold Fund is a unique international mutual fund that invests in gold mining companies across the world. The fund offers investors exposure to the gold sector, which is a safe-haven asset during times of economic uncertainty. The fund has delivered excellent returns over the years and is suitable for investors looking for exposure to the gold sector.
d) Motilal Oswal Nasdaq 100 Fund of Fund The Motilal Oswal Nasdaq 100 Fund of Fund invests in the Nasdaq 100 index, which comprises the top 100 companies listed on the Nasdaq stock exchange. The fund offers exposure to the technology sector, which has been one of the best-performing sectors globally. The fund has a diversified portfolio across sectors and is suitable for investors looking for exposure to the technology sector.
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Factors to consider while investing in international mutual funds
Before investing in international mutual funds, there are several factors that investors should consider:
a) Investment objective: Investors should first determine their investment objective and risk tolerance. This will help them choose the appropriate international mutual fund that matches their investment objectives.
b) Geographic region: Investors should consider the geographic region where the fund invests. Different regions may have different economic and political risks, and investors should evaluate these risks before investing.
c) Sector-specific funds: Investors may also consider sector-specific funds, such as technology or gold funds. These funds can offer investors exposure to specific sectors that they believe have growth potential.
d) Expense ratio: The expense ratio of the fund is an essential factor to consider. Investors should look for funds with lower expense ratios, as they can have a significant impact on the fund’s returns over the long term.
e) Performance track record: Investors should evaluate the fund’s historical performance and assess the fund manager’s track record. A fund with a good performance history and an experienced fund manager is more likely to provide consistent returns in the future.
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Risks associated with international mutual funds
Investing in international mutual funds carries certain risks. These include:
a) Currency risk: Investing in international mutual funds exposes investors to currency risk. Fluctuations in exchange rates can affect the returns on the investment.
b) Economic and political risk: Different regions may have different economic and political risks. Investors should evaluate these risks before investing in international mutual funds.
c) Regulatory risk: Regulatory risks can also affect the returns on the investment. Different countries may have different regulatory regimes that can impact the fund’s performance.
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Conclusion
Investing in international mutual funds can be an excellent way to diversify your investment portfolio and gain exposure to international markets. Investors should evaluate different factors such as investment objective, geographic region, expense ratio, performance track record, and risks associated with the investment before investing. Consulting with a financial advisor can also help investors make informed investment decisions. By carefully evaluating these factors, investors can choose the best international mutual fund that matches their investment objectives and risk tolerance.
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Frequently Asked Questions (FAQs)
What are international mutual funds?
International mutual funds are investment funds that invest in foreign stocks and securities, giving investors exposure to international markets.
Why invest in international mutual funds?
Investing in international mutual funds offers diversification benefits, access to high-growth markets, and currency diversification, which can help in reducing currency risk.
How do international mutual funds work?
International mutual funds pool money from multiple investors and invest the money in stocks, securities, or other financial instruments in foreign markets.
What are the risks associated with international mutual funds?
The risks associated with international mutual funds include currency risk, economic and political risk, regulatory risk, and market risk.
What are the benefits of investing in sector-specific international mutual funds?
Sector-specific international mutual funds offer exposure to specific sectors that investors believe have growth potential, such as technology or gold sectors.
What is the minimum investment amount for international mutual funds?
The minimum investment amount for international mutual funds can vary depending on the fund’s investment objectives, but it usually ranges from Rs. 5,000 to Rs. 10,000.
Can NRIs invest in international mutual funds in India?
Yes, NRIs can invest in international mutual funds in India, subject to certain regulations.
How is the performance of international mutual funds measured?
The performance of international mutual funds is measured by comparing their returns against a benchmark index, such as the MSCI World Index.
What is the tax implication of investing in international mutual funds in India?
The tax implication of investing in international mutual funds in India is similar to investing in domestic mutual funds, and it is subject to capital gains tax.
How can investors choose the best international mutual fund?
Investors can choose the best international mutual fund by evaluating different factors such as investment objective, geographic region, expense ratio, performance track record, and risks associated with the investment. Consulting with a financial advisor can also help investors make informed investment decisions.
