Mutual Fund Unlocked: International Mutual Funds

Indian equity market have given tremendous returns in the last couple of years, however, off-late we are witnessing some volatility. This volatility and the recent introduction of long term capital gains (LTCG) tax of 10% on equity gains exceeding Rs. 1 lakh is making people look for other investment avenues which give good return opportunity.

One of the best option for this is International Mutual funds, these funds allows investor to invest in the equity or equity-oriented securities linked to the foreign markets. Lets take a look how do they work and what are the risks involved?

International mutual funds can invest purely in ETFs or fund of funds based in foreign countries. Those funds or ETFs may be composed of equity or commodities such as gold. They could also be investments in international equities directly made by the fund manager without relying on an offshore fund manager which can be as per sectoral themes such as agriculture or regional themes such as Asia or emerging markets. Just like Indian mutual funds, international funds too carry their own risks and rewards. The basic advantage of investing in international fund is that the investor is reducing his exposure to local risk which is useful.

Investments in international funds are treated in the same way as debt mutual funds. These funds attract (STCG) Short Term Capital Gains tax on the gains accruing within the period of three years from the date of investment and (LTCG) Long Term Capital Gains tax of 20.6% on the gains accruing after three years with indexation benefits. Below mentioned are some of the top performing international mutual funds.