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Global Investment Vehicles: Definitions, Classifications, and Benefits

Global investment funds operate within the international market, offering diversification on a global level. By investing in these global funds, individuals gain exposure to foreign currencies.

Global Investment Funds: Definition, Classes, and Benefits
Global Investment Funds: Definition, Classes, and Benefits

Global Investment Vehicles: Definitions, Classifications, and Benefits

Investing in international mutual funds can be a strategic move for individuals seeking to diversify their portfolios and gain exposure to global market leaders. Here's a guide to help you understand the basics of investing in international mutual funds in India.

Understanding International Mutual Funds

International mutual funds are thematic funds that primarily invest in equity and equity-linked assets of foreign companies. They offer investors multiple options regarding the geographical locations where they can invest, such as Japan, China, Europe, Brazil, and the United States.

These funds can have portfolios that consist of both Indian and foreign equities, or they can be focused on investing in stocks of emerging markets only. Region or country-specific funds focus on the stock markets of a particular region or country.

Factors to Consider Before Investing

Before diving into international mutual funds, it's essential to consider your goals, risk appetite, and financial situation. It's advisable for investors who already have a well-diversified portfolio of Indian companies, investors looking to invest in global market leaders, investors looking to leverage opportunities in different markets, and investors with a long-term horizon to consider investing in international funds.

Currency Risk and Expense Ratio

Currency risk, the negative impact on your portfolio if the currency of the country where the fund invests depreciates with respect to the Indian rupee, is another factor to consider. Additionally, you should know the expense ratio, which is the charge to cover the fund's administrative and operating expenses.

Choosing the Right International Fund

To choose an international fund that is the best fit for your portfolio, you should identify the sub-category of international funds that will be the best fit, choose the geography or location you want to invest in, and compare the performance of funds to benchmarks and focus on the consistency of returns.

Risks Associated with International Funds

Investing in international funds comes with risks such as economic & political risk and currency risk. Economic & political risk refers to the impact of political unrest or economic turmoil in the countries or regions where the fund invests on your investment.

How to Invest in International Mutual Funds

You can invest in international mutual funds on the platform by following these steps:

  1. Download the app.
  2. Find the fund you want to invest in.
  3. Click on 'Invest Now'.
  4. Enter the amount and mode of investment.
  5. Provide basic details like PAN and bank details.
  6. After completing these steps, compare the expense ratio and characteristics of the scheme, such as investment style and fund-management style, to make your final selection.

Start Investing Today

With a SIP amount of as low as Rs. 500, you can start investing in international mutual funds and diversify your portfolio. For more detailed, dated performance data for international mutual funds in India, we recommend checking fund house reports or finance portals.

Please note that as of March 1, 2023, there is no direct list of top-performing international mutual funds in India available in the provided sources. The best-performing mutual funds cited mostly represent domestic-focused equity or debt funds. For international funds, Indian global equity funds from major fund houses are usually considered top performers, but their specific performance data for that date needs to be checked from fund house reports or finance portals.

Common questions about investing in international funds include how to invest, how much to invest, and whether international mutual funds are a good investment. These questions can be answered by using the platform.

Investment apps offer the opportunity to invest in international debt funds, providing a complementary investment avenue to mutual funds. By understanding the capital gains tax implications, one can optimize their financial gains from these investments.

When considering international mutual funds, investors should evaluate their risk appetite, investment horizon, and the geographical location they wish to invest in. Seeking education and guidance about currency risk and expense ratios is crucial for making informed decisions.

Through an investment app, investing in international mutual funds can be a straightforward process. By following the steps provided, such as downloading the app, choosing the desired fund, entering investment details, and verifying personal information, you can start building a globally diverse portfolio today.

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