Listen to this articleHave you ever wondered how Indian investors can tap into the potential of global markets? Investing in international mutual funds offers a unique opportunity to gain exposure to some of the world’s leading companies listed outside India.
With access to renowned names like Apple, Amazon, and Nike, these funds allow investors to diversify their portfolios globally. But is it as straightforward as it seems?
Before you dive in, it’s crucial to weigh the benefits, risks, and key considerations involved.
What exactly are international mutual funds, and how do they work?
International mutual funds are investment vehicles that pool money from multiple investors to invest in stocks or bonds from companies and governments across the world, offering diversification and global exposure.
By investing in these funds, you can unlock access to international markets and potentially benefit from global economic growth. But is this strategy the right fit for your financial goals? Let’s explore.
Table of Contents:
What Are the Benefits of Investing in International Mutual Funds?
US mutual funds provide geographical diversification, expert management, and the potential for higher returns by investing in stable economies and leading companies like Apple, Amazon, and Nike.
- Geographical Diversification: Have you considered the risks of relying solely on Indian markets? Investing in international mutual funds allows you to diversify geographically, spreading your investments across different countries.
This not only reduces dependence on the Indian market but also gives you exposure to stable and mature economies like the U.S., helping to balance the volatility often associated with emerging markets like India.
- Expert Management: How do you ensure your global investments are in safe hands? International mutual funds are managed by seasoned professionals with expertise in global markets.
These fund managers conduct in-depth research and analysis, ensuring your investments are strategically positioned to maximize returns while managing risks effectively.
- Potential for Higher Returns: Could a well-diversified portfolio help you achieve better returns? International mutual funds offer exposure to economic cycles across multiple regions, enhancing your chances of earning higher returns over the long term.
Moreover, investing in stable global markets adds a layer of balance to counter the fluctuations of Indian markets.
What Are the Risks of Investing in International Mutual Funds?
The main risks include currency fluctuations, geopolitical and economic uncertainties, and market volatility, which can impact returns.
- Currency Fluctuations: Have you considered how currency exchange rates could affect your returns? One of the key risks of international mutual funds is currency fluctuation. Changes in exchange rates can either boost your gains or magnify your losses, making it an important factor to watch closely.
- Geopolitical and Economic Risks: Are you prepared to navigate the complexities of international markets? Investing globally exposes your portfolio to risks such as political instability, regulatory changes, and economic uncertainty in other countries. Understanding the dynamics of each market where the fund invests is critical to managing these risks effectively.
- Market Volatility: How does the volatility of foreign markets compare to domestic ones? While established markets may offer stability, emerging markets often come with higher risks due to their inherent unpredictability. Knowing the volatility of the markets you’re investing in can help you make more informed decisions.
What Should You Consider Before Investing in International Mutual Funds?
- Aligning with Financial Goals: Are international mutual funds the right match for your financial objectives? These funds are best suited for investors with a long-term horizon and a higher risk tolerance. Whether you’re saving for retirement or funding a major milestone like education, their growth potential can help you achieve these goals over time.
- Exploring Fund Types: Have you explored the different types of international funds? Options include global funds, regional funds, country-specific funds, international commodity funds, thematic funds, and fund-of-funds. Selecting the right type depends on your investment goals and risk appetite. Which one aligns with your strategy?
- Risk Tolerance and Investment Horizon: Are you prepared to handle the unique risks of foreign markets? International funds require a careful assessment of your risk profile. A long-term investment horizon, ideally five years or more , can help you ride out short-term volatility and achieve better returns in the long run.
Are International Funds Truly Safe?
While international funds open the door to significant growth opportunities, are they without risks? Like any investment, they come with their share of challenges, including market volatility, currency fluctuations, and geopolitical uncertainties.
So, how can you navigate these risks? By conducting thorough research, setting clear financial goals, and understanding your risk tolerance, you can make informed decisions and approach international markets with confidence.
Is Now the Right Time to Invest in US Funds?
With Indian markets facing a downturn and US markets showing resilience, should you consider diversifying your portfolio globally?
Diversification isn’t just about spreading investments across categories; it’s about looking beyond borders. But how much should you allocate? Experts recommend limiting your exposure to international funds to 10–15% of your total portfolio.
Is the current rally in US markets a good enough reason to invest? The answer lies in your approach. Instead of chasing short-term gains, focus on the bigger picture, geographical diversification.
By adopting a long-term horizon of 5–10 years, you can truly benefit from the stability and growth potential of global markets. Are you ready to think beyond the current trends and invest wisely?
International Funds in India Ranked by Assets Under Management (AUM)
| Data as on – 24-12-2024 | ||||||||
| Category – Fund of Funds-Overseas | ||||||||
| 1 Week | 1 Month | 3 Months | 6 Months | 1 Year | 3 Years | 5 Years | ||
| Scheme Name | AUM (Crore) | Returns (%) | Returns (%) | Returns (%) | Returns (%) | Returns (%) | Returns (%) | Returns (%) |
| Mirae Asset NYSE FANG and ETF FOF Reg Gr | 1694.58 | -0.99 | 21.65 | 42.55 | 41.87 | 83.42 | 33.2 | – |
| Motilal Oswal Nasdaq 100 FOF Reg Gr | 5468.75 | 2.82 | 23.91 | 29.39 | 31.33 | 55.99 | 20.41 | 27.86 |
| Bandhan US Equity FOF Reg Gr | 345.52 | -2.11 | 2.34 | 8.63 | 11.05 | 35.96 | 13.89 | – |
| Navi NASDAQ 100 Fund of Fund Reg Gr | 1010.01 | -0.64 | 5.82 | 11.26 | 14.25 | 32.94 | – | – |
| Edelweiss US Technology Equity FOF Reg Gr | 2574.34 | -3.69 | 2.13 | 15.47 | 15.16 | 31.6 | 9.78 | – |
| Mirae Asset Global X Artificial Intelligence & Technology ETF FOF Reg Gr | 325.73 | -1.05 | 4.07 | 10.91 | 15.94 | 31.3 | – | – |
| ABSL Nasdaq 100 FOF Reg Gr | 406.52 | -1.97 | 5.03 | 10.09 | 11.72 | 30.9 | 14 | – |
| Franklin India Feeder Franklin US Opportunities Gr | 3775.59 | -0.08 | 1.87 | 6.67 | 11.89 | 30.73 | 7.45 | 16.61 |
| Axis NASDAQ 100 Fund of Fund Reg Gr | 176.16 | -1.9 | 4.92 | 10.06 | 11.68 | 30.55 | – | – |
| Kotak NASDAQ 100 FOF Reg Gr | 3324.49 | -2.62 | 3.96 | 9.49 | 10.09 | 30.03 | 13.77 | – |
| Invesco India Invesco EQQQ Nasdaq 100 ETF FOF Reg Gr | 426.04 | -2.71 | 4.21 | 9.44 | 10.47 | 30.01 | – | – |
| Navi US Total Stock Market Fund of Fund Reg Gr | 999.59 | -0.28 | 1.31 | 7.4 | 13.95 | 29.49 | – | – |
| Invesco India Invesco Global Consumer Trends FOF Gr | 306.14 | -3.09 | 3.06 | 15.41 | 22.04 | 28.95 | -0.48 | – |
| PGIM India Global Equity Opp Gr | 1356.53 | -0.96 | 2.38 | 3.65 | 6.57 | 26.79 | 5.18 | 16.7 |
| Nippon India Taiwan Equity Fund Reg Gr | 358.36 | 0.34 | 3.71 | 5.24 | 6.1 | 26.28 | 5.64 | – |
| SBI Intl Access US Equity FoF Reg Gr | 980.4 | -2.28 | -1.19 | 3.46 | 5.44 | 24.11 | 11.28 | – |
| PGIM India Emerging Mkts Equity Gr | 95.38 | -2.01 | 2.29 | 3.03 | 8.24 | 23.43 | -3.34 | 1.33 |
| Axis Global Innovation FOF Reg Gr | 508.71 | -2.34 | 2.22 | 3.98 | 5.54 | 23.17 | 7.23 | – |
| HSBC Asia Pacific (Ex Japan) IDCW Yield Gr | 7.73 | 0.15 | -0.38 | -1.21 | 5.26 | 22.54 | 7.21 | 11.08 |
| DSP Global Innovation Fund of Fund Reg Gr | 915.5 | -2.03 | 1.8 | 6.61 | 4.89 | 22.14 | – | – |
| HDFC Developed World Indexes FOF Gr | 1282.47 | -1.81 | 0.9 | 2.97 | 8.45 | 21.88 | 10.63 | – |
| Kotak Global Innovation FOF Reg Gr | 627.47 | -2.14 | 0.56 | 4.49 | 9.49 | 21.45 | 3.16 | – |
| Axis Global Equity Alpha FOF Reg Gr | 833.62 | -2.22 | 0.36 | 4.15 | 6.8 | 21.07 | 9.49 | – |
| ABSL Global Emerging Opp Reg Gr | 248.13 | -2.01 | 0.56 | 4.07 | 3.93 | 20.75 | 5.02 | 12.71 |
| ABSL Global Excellence Eq FOF Ret Reg Gr | 201.15 | -2.17 | 1.09 | 1.62 | 1.89 | 20.63 | 8.4 | 9.16 |
| Edelweiss Greater China Equity Off Shore Fund Reg Gr | 1571.88 | 0.55 | 3.17 | 11.86 | 5.44 | 18.84 | -7.31 | 3.3 |
| DSP US Flexible Equity FOF Reg Gr | 853.05 | -2.82 | 1.66 | 3.66 | 5.59 | 17.66 | 10.28 | 15.39 |
| Edelweiss Asean Equity Off Shore Fund Reg Gr | 94.57 | -2.41 | -1.72 | -5.23 | 13.21 | 15.33 | 5.22 | 5.06 |
| Edelweiss US Value Equity Offshore Fund Reg Gr | 140.13 | -3.43 | -6.13 | 0.3 | 6.67 | 14.58 | 8.89 | 11.7 |
| Sundaram Global Brand Fund Gr | 114.87 | -0.32 | 4.91 | 5.57 | 7.76 | 14.46 | 7.58 | 12.66 |
| Axis Greater China Equity FOF Reg Gr | 323.8 | -0.14 | 1.83 | 6.48 | 3.58 | 13.78 | -4.84 | – |
| Invesco India Invesco Global Equity Income FOF Reg Gr | 25.62 | -3.09 | -0.76 | -0.93 | 5.26 | 13.66 | 11.82 | 12.82 |
| DSP World Gold Fund of Fund Reg Gr | 1045.32 | -4.58 | -8.69 | -12.06 | 6.37 | 12.07 | 5.09 | 8.09 |
| HSBC Global Emerging Mkts Fund Gr | 34.1 | -1.79 | -0.59 | -1.63 | -2.33 | 11.56 | -1.44 | 3.54 |
| DSP Global Allocation FOF Reg Gr | 54.34 | -1.92 | -0.7 | 0.61 | 4.14 | 11.08 | 5.03 | 8.83 |
| Edelweiss Emerging Mkts Opp Equity Offshore Fund Reg Gr | 114.61 | -1.35 | 0.62 | -1.24 | -2.11 | 8.86 | -2.71 | 1.44 |
| Kotak Global Emerging Mkt Gr | 87.96 | -1.38 | -1.07 | -4.4 | 0.33 | 8.5 | 0.05 | 5.39 |
| PGIM India Global Select Real Estate Securities FOF Reg Gr | 54.17 | -2.08 | -4.44 | -6.43 | 7.93 | 8.43 | -0.16 | – |
| Bandhan US TREASURY BOND 0-1 YEAR FOF Reg Gr | 141.52 | 0.41 | 1.06 | 2.9 | 4.3 | 7.24 | – | – |
| ABSL US Treasury 1-3 Year Bond ETFs FOF Reg Gr | 85.19 | 0.13 | 1.17 | 1.19 | 4.4 | 6.07 | – | – |
| Edelweiss Europe Dynamic Equity Offshore Fund Gr Reg | 74.38 | -3.34 | -1.83 | -8.33 | -2.7 | 5.85 | 5.08 | 9.26 |
| Motilal Oswal Developed Market Ex US ETFs FOF Reg Gr | 30.32 | -1.01 | -0.45 | -5.91 | -0.34 | 5.14 | – | – |
| ICICI Pru Global Stable Equity FOF Gr | 120.46 | -2.29 | -2.7 | -4.61 | 3.96 | 4.62 | 6.36 | 8.28 |
| HSBC Global Equity Climate Change FOF Reg Gr | 74.64 | -3.15 | -2.99 | -5.1 | -1.46 | 4.35 | -2.84 | – |
| ABSL US Treasury 3-10 Year Bond ETFs FOF Reg Gr | 185 | -0.67 | 0.4 | -1.9 | 2.79 | 3.02 | – | – |
| ICICI Pru Strategic Metal and Energy Equity FOF Gr | 100.95 | -2.21 | -9.9 | -9.27 | -3.07 | 1.7 | – | – |
| Baroda BNP Paribas Aqua Fund of Fund Reg Gr | 45.42 | -3.92 | -5.14 | -7.83 | -1.56 | 0.9 | 1.58 | – |
| DSP US Treasury FOF Reg Gr | 60 | -0.89 | 0.1 | -2.5 | 2.31 | – | – | – |
| Axis US Treasury Dynamic Bond ETF FOF Reg Gr | 65 | -1.13 | -0.16 | -3.39 | 2.03 | – | – | – |
| Franklin India Feeder Templeton European Opportunities Gr | 15.58 | -1.55 | -0.02 | -8.73 | -4.53 | -0.65 | 1.47 | -0.03 |
| Mirae Asset Global Electric & Autonomous Vehicles ETFs FOF Reg Gr | 61.38 | -0.71 | 0.6 | 7.06 | 4.16 | -0.98 | – | – |
| DSP World Energy FOF Reg Gr | 94.71 | -2.55 | -3.3 | -8.87 | -5.26 | -5.95 | -1.34 | 4.53 |
| Invesco India Invesco Pan European Equity FOF Reg Gr | 34.34 | -3.34 | -1.51 | -9.22 | -6.62 | -6.31 | 4.37 | 6.36 |
| Mahindra Manulife Asia Pacific REITs FOF Reg Gr | 21.81 | -0.78 | -1.87 | -12.11 | 3.65 | -8.55 | -5.55 | – |
| DSP World Mining Fund Reg Gr | 137.48 | -4.75 | -9.32 | -10.07 | -6.7 | -8.64 | 1.04 | 11.15 |
| HSBC Brazil Fund Gr | 42.23 | -4.8 | -11.51 | -16.92 | -10.49 | -26.83 | 0.96 | -10.12 |
| Category Average | – | -1.77 | 0.7 | 2.17 | 6.08 | 16.78 | 5.49 | 8.52 |
Final Takeaway
Can international mutual funds be the key to unlocking global investment opportunities? For Indian investors, they offer a unique chance to diversify across global markets and potentially generate significant long-term returns.
But have you considered the risks involved? Is your investment strategy aligned with your financial goals? By evaluating the right fund options and carefully managing risks, you can enhance your portfolio with valuable global exposure.
