Having exposure to international markets in your portfolio might be advantageous for a variety of reasons. One of the primary benefits is that it enables you to make use of the growth of huge multinational corporations. These businesses frequently have a global reach and are able to produce revenue from a number of different countries, which helps to protect them from the effects of volatility in the markets of individual nations.
One of the most convenient ways to gain exposure to international equity is to make investments in international mutual funds. Read on to find more about international mutual funds and their advantages.
What are international mutual funds?
The majority of the investments made by international mutual funds are comprised of shares, equity-related instruments, and debt securities issued by companies and entities that are listed outside of India. The majority of these funds are actually fund of funds plans, which means that they have other offshore funds as their foundation that invest in global markets.
Investing in international mutual funds is done in the same manner as investing in any other type of equity mutual fund. The money is then invested in rupees, and the investors are provided with units of the funds as a return for their investment. The fund manager will put the money into the equity of companies that are listed on marketplaces outside of India in order to maximize its potential return.
Types of international mutual funds
Global funds: Global funds are investment vehicles that hold a broad portfolio of stocks, bonds, and other securities issued by corporations that are headquartered in several countries throughout the world. Because these funds are not limited by sector or geography, their managers are free to put their money to work in whichever industry or nation they believe would generate the highest possible profits for their clients. This makes it possible to diversify an investment portfolio to a great degree and can contribute to lowering the portfolio’s total risk.
Thematic funds: Thematic international funds are a form of international mutual fund that invests in a certain theme, such as a sector or an index. These funds give you the option to capitalize on a certain industry or market that the managers of the funds believe has a significant capacity for future expansion. For instance, the primary focus of an investment by a thematic fund can be on businesses related to renewable energy or technology that are based in Europe or Asia respectively.
Region or country specific funds: Region-specific international funds invest exclusively in equities originating from a single geographic area. Investors have the ability to capitalize on the expansionary potential of a specific economy or market through the use of these funds.
Advantages of international mutual funds
You have the opportunity to obtain exposure to international markets in an easy manner with international mutual funds. This can be especially helpful for investors who are wanting to diversify their portfolios and potentially achieve higher returns on their investments. Investing in overseas mutual funds can also provide access to companies that may not be available on domestic markets, such as rapidly expanding emerging market enterprises. This can be a benefit for investors looking to diversify their portfolios. In addition, these funds are managed by experienced professionals that have in-depth expertise in international markets and can therefore assist investors in making well-informed decisions on their investments.