Best International Mutual Funds in India: Introduction
International mutual funds are the equity funds that deal in the stocks of companies listed outside India. They allow the country’s investors to invest in overseas markets. Such investment is one of the easiest ways to invest in the global stock market, as it has given access to overseas investment. This article is for you if you plan to invest in international funds in India.
Meaning of international mutual funds
International funds invest in the stocks of companies listed in overseas markets, also known as equity funds. With more and more people exploring the various investment options, investors are becoming more aware of the investment options across the world. Investing in these funds is risky as it is difficult to track the market movements of a country with various global and economic changes.
International Mutual funds have become an attractive investment option for investors because of volatile local stock markets.
Best International Mutual Funds In India 2022
Investors have turned to foreign markets for the diversification of their portfolios. To find out the best international mutual fund one must assess the risk appetite and financial goals. Following are the top 5 global mutual funds in India:
Top 5 Global Mutual Funds in India
| Sr. No. | Fund Name | NAV (Till Date)(INR) | AUM |
| 1. | Franklin India Feeder Franklin US Opportunities Direct Fund-Growth | 47.3 | ₹2939 Cr |
| 2. | ICICI Prudential US Bluechip Equity Fund | 48.6 | ₹2370 Cr |
| 3. | Edelweiss Greater China Equity Off-shore Fund | 37.1 | ₹1269 Cr |
| 4. | Nippon India US Equity Opportunities Fund | 23.4 | ₹524 Cr |
| 5. | PGIM India Global Equity Opportunities Fund | 28.5 | ₹1254 Cr |
(Data as of 25 November 2022)
*CAGR- Compound annual growth rate
Disclaimer: The securities quoted are exemplary and not recommendatory. Past performance is not indicative of future returns
How do International Mutual Funds Work?
International mutual funds follow a master-feeder structure. It is a three-tier structure where the investor's funds are placed in the feeder fund, which is then invested in the master fund. Lastly, the master fund invests the funds in the market.
Investing in international funds in India is the same as investing in an equity fund. The fund manager invests the money in the stocks of companies that are listed on exchanges outside India. The fund manager can directly purchase the stocks or invest in existing global funds or a pre-designed portfolio of foreign assets. These investments are administered by the Indian mutual fund companies and are regulated by SEBI.
How To Pick an International Mutual Fund?
The following steps are to be followed to select the best global mutual funds in India:
- The track record of the fund is to be checked.
- Look for experienced and professional fund managers.
- The scheme should complement the current portfolio.
- Read the document carefully for all the underlying costs and expenses.
- Also, ensure that the country you choose has a tax treaty with India to avoid double taxation.
Features of Global Mutual Funds
The following are the specific features of the best global mutual funds in India:
- Diversification: The main motive for investing in International Mutual Funds is diversification. Diversification helps in balancing the portfolio and protecting the interest of investors.
- Ease in Investing: An investor can give a global edge to the portfolio by directly investing in foreign markets.
- Currency Fluctuations: The NAV is calculated by using the current exchange rate while investing in international mutual funds in India. The exchange rate fluctuates every day, it is observed that the more the rupee depreciates the higher the gains.
- Country-specific exposure: If an investor wants to take advantage of one country’s growth, then the investor will move as per the changing conditions of the particular economy.
- Risk exposure: As the investment portfolio consists of securities of a foreign country, it becomes difficult to track the social and economic conditions of the country. This makes the international funds more vulnerable to risk.
Factors to be considered while investing in foreign funds
There are different factors to be considered while investing in foreign funds:
- Currency risks: This is the most common risk as your investment in rupees is converted into foreign currency. Therefore it becomes important to check the exchange rates before redeeming international mutual funds.
- Political and economic risks: Political events can occur in different countries and may increase unpredictable risks for investors.
- Investment objective: The investment objective should match your financial needs. An investment horizon of 5- 7 years is recommended for foreign investment in mutual funds.
- Choosing the correct country/region: Developed countries offer stable returns and low risk while developing countries are riskier. It is always good to invest in countries with strong corporate governance and legal system.
Final Words
International funds are suitable for investors looking to leverage growth in different economies. These investors have a high-risk appetite and are willing to invest for the long term. It should be noted that such investments are more suitable for experienced and professional investors. Check out the top global mutual funds in India by evaluating your comfort zone and risk appetite.
Important things to remember:
1. Do Not Blindly Follow Hot Tips
No matter how credible the source is, never follow a stock marketing tip blindly without conducting thorough research personally. Always select the stocks after doing proper research and analysis on the performance as well as the companies. While some tips can work out to give you huge benefits, the wrong ones can push you down under the risk pretty quickly.
2. Eliminate Loser Stocks from Portfolio
There is absolutely no guarantee that a stock will rise after a great fall. Know that it is extremely important to be practical about what is possible and what's impossible in the stock market. So, upon realizing that a stock is performing poorly in your portfolio, accept your mistake and sell it immediately to prevent further losses.
3. Don't Exceed Your Investment Budget Abruptly
While it's true that long-term investments are way better than other forms of investment, you shouldn't exceed your investment budget in a haste. Instead, decide on a fixed amount and invest it across various good stocks. Rather than investing in only one stock, divide your budget evenly across multiple good-performing stocks and shares.
Disclaimer: The securities quoted are exemplary and not recommendatory. Past performance is not indicative of future returns
Where do International mutual funds invest?
International mutual funds invest in stocks listed outside India. There are different types of funds that can apply in specific regions, countries, or across the globe.
Why should an investor invest in international mutual funds?
International funds allow you to become owners of some of the biggest companies in the world like Google, Apple, and Microsoft. An investor also reduces the portfolio risk as the returns are no longer dependent on one market. Also, an investor gets benefits from currency fluctuations.
How are international mutual funds taxed in India?
International mutual funds invest primarily in equities, they are taxed as non-equity funds in India. Short-term capital gains and long-term capital gains.