Top 10 best performing international mutual funds: Factors to consider before investing
If you're considering diversifying your portfolio by investing in international funds, this information is for you.
International mutual funds are specialised equity funds focusing on the stocks of companies outside India, offering domestic investors an opportunity to partake in foreign markets. This approach serves as a straightforward method for entering the global stock market, providing a gateway to international investment opportunities.
If you're considering diversifying your portfolio by investing in international funds, this information is tailored for you.
Understanding International Mutual Funds
International funds are dedicated to investing in the stocks of companies across global markets and fall under the category of equity funds. As the investment landscape broadens, investors are increasingly seeking opportunities beyond their home country, although such ventures come with their own set of challenges, including the complexity of monitoring foreign market dynamics amidst global and economic shifts.
The allure of international mutual funds has grown, particularly as a means to hedge against the unpredictability of local stock markets.
For those looking to expand their investment horizons to include foreign assets, it's essential to evaluate one's risk tolerance and financial objectives. Here's a look into how international mutual funds operate and what to consider before investing.
Top 10 best-performing international funds based on 3-year returns
|
Fund name
|
1-year return
|
3-year return
|
5-year return
|
|
Kotak Nasdaq 100 FOF
|
47.47
|
14.89
|
--
|
|
Aditya Birla Sun Life Global Excellence Equity FoF
|
33.57
|
14.31
|
8.53
|
|
Motilal Oswal S&P 500 Index Fund
|
24.42
|
14.11
|
--
|
|
ICICI Prudential US Bluechip Equity Fund
|
19.18
|
14.06
|
17.27
|
|
Motilal Oswal NASDAQ 100 ETF
|
44.88
|
14.01
|
24.78
|
|
Invesco India - Invesco Global Equity Income FoF
|
15.76
|
13.44
|
13.50
|
|
DSP US Flexible Equity Fund
|
20.46
|
13.37
|
17.12
|
|
Edelweiss US Value Equity Off-shore Fund
|
7.47
|
12.76
|
13.24
|
|
Axis Global Equity Alpha FoF
|
19.78
|
11.86
|
--
|
|
Nippon India US Equity Opportunities Fund
|
31.44
|
11.44
|
16.39
|
*Data as of February 13, 2024.
Factors to consider before investing in International Funds
When entering into international funds, several factors need attention:
Currency Risks: Given that investments are converted from INR to foreign currency, monitoring exchange rates is crucial, especially when redeeming funds.
Political and Economic Risks: The political climate in various countries can introduce unforeseen risks, adding a layer of unpredictability.
Investment Objective: Aligning your investment with your financial goals is paramount, with a recommended investment horizon of 5-7 years for mutual funds in international markets.
Country/Region Selection: While developed markets offer stability and lower risk, emerging markets present higher risk but the potential for significant returns. Opt for regions known for robust corporate governance and legal frameworks.
How do International Mutual Funds Work?
These funds typically employ a master-feeder structure, a layered approach where investments from the feeder fund are channelled into the master fund, which in turn, invests in the global market.
Similar to domestic equity funds, the fund manager allocates capital to stocks listed on foreign exchanges. This can be achieved either through direct stock purchases or by investing in global funds or specific portfolios of international assets. Managed by Indian mutual fund companies, these investments are overseen by SEBI, ensuring regulatory compliance.
Choosing the right international mutual fund involves a careful assessment of these factors to ensure alignment with your investment strategy and financial aspirations.