Also referred to as overseas funds or foreign funds, international funds largely invest in companies that are listed anywhere in the world other than the investor’s country of origin. Individuals looking to invest in mutual funds outside domestic markets generally prefer these mutual funds. Investors choose to invest in international funds to diversify their investment portfolio. This article serves as a mutual fund investment guide in international mutual funds and whether or not should you invest in them.
Advantages of Investing in Foreign Mutual Funds in India
Commerce and global trade operate in tandem; however, the markets in diverse economies do not always move in sync. An international fund offers an investor with the opportunity to invest in an economy that is doing well at a given time. Following are some of the benefits of investing in international mutual funds:
These funds help diversify the investment portfolio. It also provides investors with access to markets that would otherwise be difficult to access and reduces their exposure to their local markets. An investor can benefit from the highs and lows experienced in a specific market at a given time frame.
- Balances economic volatility
Investors invest in international mutual funds to ensure healthy returns by overpowering the economic cycles of different markets. This sets off any losses that may occur from volatility observed in a specific economy by profiting from better-performing markets.
- Hedging of investment
Investments in foreign funds act as a hedge for local investments in cases when the rupee falls against the dollar. This diminishes the losses that may accrue from currency depreciation. Conversely, if the rupee falls against the foreign currency, an investor would receive more rupees per unit of that particular currency.
- Access to blue-chip international corporations
Several corporate giants such as Google, Microsoft, Coca-Cola, or Royal Dutch Shell are not listed on the Indian stock exchanges. With international funds, you can bridge this gap and invest in these blue-chip international companies.
- International Exposure
Attaining insight into a single economy takes a decent amount of time and efforts. You might not be endowed with adequate knowledge of foreign companies and the economies they work in. In such circumstances, a professional intermediary can be of huge help. An international fund managed by an expert team can offer you beneficial exposure to the global markets.
Risks Related To Investing In Foreign Mutual Funds:
As with any other types of investments, international funds come with their own set of risks. The most common perils to investments in international mutual funds include the currency fluctuations and the economic and political factors that widely affect investments in these funds.
You can easily invest in international funds online as it’s a and hassle-free and short affair. Make sure you align your investment options with your financial goals, risk appetite and investment horizon. Happy Investing!