What are Global Mutual Funds?
Global Mutual Funds / International Mutual Funds are mutual funds that invest in companies located outside the investor’s country of residence. They are also known as foreign funds.
International funds can follow two ways to invest your money –
- Purchase stocks directly and build a portfolio. In this case, the expense ratio is typically charged by AMC’s.
- Invest in an existing global fund with a pre-existing portfolio of foreign stocks. Here expense ratio would be an addition of feeder fund (Indian AMC) expense ratio and underlying fund (global fund) expense ratio. SEBI has capped this at 2.25%.
Whatever the method followed, funds are eventually managed by Indian AMC, and they have to follow SEBI guidelines.
Different types of Global Mutual Funds in India
From the options available to investors, Global mutual funds can be classified into-
Thematic International Mutual Funds
Like domestic thematic mutual funds wherein the fund follows a theme-based investing approach, a thematic international fund will invest in the stocks of foreign companies belonging to the concerned theme.
Region or country-specific
These funds invest in the stock market of a particular region or a particular country. The main motive is to take advantage of the opportunities presented by these markets to make good profits.
Global markets
Instead of catering to a specific country or region, these funds invest globally and have a portfolio consisting of stocks of companies from across the world. The main aim here is diversification.
Why invest in Global Mutual Funds in India?
| 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
|---|---|---|---|---|---|
| NIKKEI (JAPAN) 9.33% | FTSE (UK) -17.22% | HANG SENG (HONG KONG) 35.07% | BSE SENSEX (INDIA) 6.67% | DJIA (US) 22.24% | NIKKEI (JAPAN) 13.43% |
| KOSPI (KOREA) 1.81% | DJIA (US) 15.24% | BSE SENSEX (INDIA) 28.06% | DJIA (US) -6.03% | NIKKEI (JAPAN) 20.93% | KOSPI (KOREA) 6.68% |
| DJIA (US) -2.29% | KOSPI (KOREA) 5.61% | DJIA (US) 24.33% | FTSE (UK) -11.95% | BSE SENSEX (INDIA) 14.94% | DJIA (US) -0.72% |
| FTSE (UK) -4.18% | BSE SENSEX (INDIA) 3.91% | KOSPI (KOREA) 20.72% | NIKKEI (JAPAN) -14.85% | HANG SENG (HONG KONG) 12.17% | BSE SENSEX (INDIA) -5.05% |
| BSE SENSEX (INDIA) -6.35% | NIKKEI (JAPAN) 3.6% | NIKKEI (JAPAN) 16.18% | HANG SENG (HONG KONG) -15.3% | KOSPI (KOREA) 9.34% | HANG SENG (HONG KONG) -10.32% |
| HANG SENG (HONG KONG) -7.62% | HANG SENG (HONG KONG) 3.16% | FTSE (UK) 7.10% | KOSPI (KOREA) -17.91% | FTSE (UK) 3.13% | FTSE (UK) -20.05% |
Source – ETMoney
Benefits of Investing in International Mutual Funds
Diversification of global scale
Further minimizes your portfolio risk in case of bad economic conditions or poor returns from one particular market.
Become the owner of big global businesses
These global businesses are not dependent on one market for their revenue, making them excellent investment prospects.
Currency diversification
If the Rupee falls against the foreign currency in our investment period, our gains increase, as illustrated below.
| Money Invested | ₹ 10,000.00 |
| The prevalent dollar value in rupees | ₹ 75.00 |
| Conversion to dollars | $ 133.33 |
| Portfolio increased to | $ 150.00 |
| The current dollar value in rupees | ₹ 77.00 |
| Portfolio conversion in rupees | ₹ 11,550.00 |
Risks of Investing in International Mutual Funds
Economic and political risk
Political unrest or economic turmoil can negatively impact your investments.
Currency risk
If the Rupee rises compared to the foreign currency, then returns reduce accordingly; inversely to the illustration mentioned above for benefits from currency diversification.
Taxation of Global Mutual Funds in India
Even when investments are in equities, returns from international funds are taxed the way debt funds are taxed.
Short term Capital Gain
If redeemed within three years, the gains will be considered STCG and taxed at 15%
Long term Capital Gain
If redeemed after three years, the gains will be considered LTCG and taxed at the rate of 20% after indexation.
Best Global Mutual Funds in India
| Fund Name | Launch | Net Assets (Cr) | 1 Yr Ret (%) | 3 Yr Ret (%) | 5 Yr Ret (%) | 10 Yr Ret (%) | Standard Deviation | Sharpe Ratio | Fund Manager |
|---|---|---|---|---|---|---|---|---|---|
| Aditya Birla Sun Life Global Emerging Opportunities Fund | 17-Sep-2008 | 298.00 | 8.18 | 17.52 | 9.61 | 4.04 | 13.40 | 1.38 | Vinod Bhat |
| DSP US Flexible Equity Fund | 3-Aug-2012 | 712.00 | 16.60 | 20.54 | 16.31 | -- | 16.09 | 1.23 | Kedar Karnik, Laukik Bagwe, Jay Kothari |
| Edelweiss Greater China Equity Off-shore Fund | 26-Aug-2009 | 1,965 | -19.93 | 24.51 | 18.93 | 15.45 | 19.43 | 1.19 | Bhavesh Jain, Bharat Lahoti |
| Edelweiss US Value Equity Off-shore Fund | 7-Aug-2013 | 84.00 | 19.72 | 15.81 | 11.08 | -- | 17.88 | 0.91 | Bhavesh Jain, Bharat Lahoti |
| Franklin India Feeder Franklin US Opportunities Fund | 6-Feb-2012 | 4,167 | 1.74 | 21.84 | 19.22 | -- | 18.84 | 1.38 | Sandeep Manam |
| ICICI Prudential US Bluechip Equity Fund | 6-Jul-2012 | 2,005 | 17.00 | 20.40 | 17.42 | -- | 16.70 | 1.20 | Rohan Maru, Priyanka Khandelwal |
| Nippon India US Equity Opportunities Fund | 23-Jul-2015 | 592.00 | 8.59 | 18.42 | 16.81 | -- | 17.33 | 1.18 | Anju Chhajer, Kinjal Desai |
| PGIM India Global Equity Opportunities Fund | 14-May-2010 | 1,725 | -12.06 | 22.64 | 17.47 | 10.55 | 20.58 | 1.36 | Ravi Adukia |
| Nippon India Japan Equity Fund | 1-Aug-2014 | 249 | 1.59 | 10.88 | 9.37 | -- | 14.90 | 0.69 | Kinjal Desai, Anju Chhajer. |
| HSBC Brazil Fund | 1-May-2011 | 26 | -19.18 | -14.12 | -4.51 | -4.66 | 36.28 | -0.22 | B Aswin Kumar |
| Invesco India Feeder - Invesco Pan European Equity Fund | 1-Jan-2014 | 37 | 14.42 | 8.82 | 6.69 | -- | 21.90 | 0.44 | Neelesh Dhamnaskar |
| Edelweiss Europe Dynamic Equity Offshore Fund | 1-Feb-2014 | 174 | 6.08 | 12.40 | 7.67 | -- | 19.25 | 0.75 | Bharat Lahoti, Bhavesh Jain |
| Franklin India Feeder - Templeton European Oppo. Fund | 1-May-2014 | 23 | 0.50 | 0.20 | 1.09 | -- | 20.79 | 0.11 | Sandeep Manam |
| Axis Global Equity Alpha Fund of Fund | 1-Sep-2020 | 1,419 | 13.47 | -- | -- | -- | -- | -- | Hitesh Das |
| Edelweiss Asean Equity Offshore Fund | 1-Jul-2011 | 61.00 | 2.06 | 4.06 | 6.71 | 8.06 | 20.21 | 0.24 | Bharat Lahoti, Bhavesh Jain |
| ICICI Pru Global Adv. Fund (FOF) | 1-Oct-2019 | 254.00 | -2.70 | -- | -- | -- | -- | -- | Dharmesh Kakkad, Sankaran Naren |
| PGIM India Global Equity Oppo. Fund | 1-May-2010 | 1,725.00 | -13.87 | 21.94 | 16.57 | 10.43 | 20.58 | 1.36 | Ravi Adukia |
| Kotak Global Emerging Market Fund | 1-Sep-2007 | 148.00 | -8.58 | 14.09 | 10.34 | 8.27 | 16.21 | 0.77 | Arjun Khanna |
| HSBC Global Emerging Markets Fund | 1-Mar-2008 | 16.00 | -13.37 | 10.80 | 9.82 | 6.94 | 18.41 | 0.62 | B. Aswin Kumar |
| Edelweiss Emerging Markets Oppo. Equity Offshore Fund | 1-Jul-2014 | 141.00 | -14.34 | 9.43 | 10.37 | -- | 17.69 | 0.56 | Bharat Lahoti, Bhavesh Jain |
| PGIM India Emerging Markets Equity Fund | 1-Sep-2007 | 230.00 | -22.15 | 6.08 | 5.03 | 6.04 | 19.60 | 0.52 | Ravi Adukia |
| DSP Global Allocation Fund | 1-Aug-2014 | 116.00 | -0.65 | 11.39 | 8.15 | -- | 10.02 | 1.12 | Jay Kothari, Kedar Karnik, Laukik Bagwe |
Returns (1 Year & 3 Years)
*Data as on 21st January 2022
Also, have a look at Best Small Cap Mutual Funds & AMC Profiles, If you need any assistance on How To Invest In Mutual Funds Feel free to contact Wealth Baba – Financial Planner & Investment Advisor in India. We will try to help you out in the best possible way.
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