Things to know about International Mutual Funds
Today, investors are thinking beyond the boundaries of their own country. They seek better opportunities and significant investment moves. This is primarily why investment channels like International Mutual Funds have gained considerable popularity. Here is what you should know about such International Fund of Funds:
Meaning
International Mutual Funds are Mutual Funds which invest in companies located outside the investor’s homeland. They are also popularly known as Foreign Funds. However, they are not the same as ‘Global Funds’, which cover the entire world.
How do they work?
Investing in such schemes is the same as investing in any other Equity Mutual Fund. You invest the money in rupees and get allocated the fund units. The fund manager then utilises your invested capital to invest in stocks of companies listed on exchanges outside of India. There are ways where the fund manager does the same:
By purchasing stocks directly to build your portfolio
By investing your money in an existing global fund with a pre-designed portfolio consisting of stocks of foreign companies
Indian Mutual Fund companies administer these investments regardless of the manager’s route. Like any standard Mutual Fund Investment, they are regulated by the Securities Exchange Board of India.
Who should invest?
International Mutual Funds suit the preferences of investors like:
Those with a diverse domestic portfolio
Investors with a well-diversified portfolio of Indian companies can further enhance the same by investing in International Funds.
Those looking to invest in global markets
Global brands are usually not listed on the Indian Stock Exchanges. Hence, investors who wish to venture into these brands can do so by investing in International Funds. That way, they will get a share in the profits these companies make.
Investors with long-term plans
Investors looking to mobilise a significant corpus to fulfil their long-term objectives should opt for such international schemes. It enables them to reap the benefits of compounding. Besides, to truly enjoy the perks of an International Fund like the World Energy Fund, they must have a horizon of at least five years.
Advantages
International Funds provide investors with the following benefits:
Such schemes help remarkably in efficient and instant portfolio diversification
Investors can be a part of more significant investments, which would have been slightly challenging if they stuck to domestic investing.
Investors get assistance in managing their portfolios from professional fund managers with expertise in managing funds in the international market.
For further guidance in investment decisions, fund management companies offer research analyst teams located internationally. This enables the investor to receive accurate and reliable feedback.
These funds offer high liquidity, which empowers investors to manage their invested capital as and when they like.
Investing in International Funds broadens investors’ understanding of the international market and hones their skills.