International Mutual funds are a type of mutual fund that invest in stocks of companies located outside of India. These types of mutual funds inherently carry higher risk but at the same time can also provide an opportunity to get diversification and higher risk adjusted returns to your portfolio.
An international mutual fund offers an excellent opportunity for investors to diversify their investments and also earn returns by being a part of the growth of companies around the world. Investing in International mutual funds like any other investment has its pros and cons, its advantages include:Learn how to mange your money & create wealth, Download your FREE eBook now
An investment portfolio must include a mix of high, medium, and low-risk investments, and hence an International mutual fund can be added to the portfolio for proper diversification.
A country can never top the charts consistently and has its own economic cycles hence by investing in a different country you can hedge the risks so as to prevent losses.
You might not have adequate knowledge of the foreign county’s economy and industry but through International mutual funds, you can gain access to such markets under expert supervision by the fund’s manager.
List of top 3 International mutual funds:
Here is a list of 3 International mutual funds you can consider investing in,
Franklin India Feeder – Franklin U.S. Opportunities Fund:
This fund gives you an opportunity to invest in US companies through Franklin U.S. Opportunities Fund. The main objective of this fund is to provide capital appreciation by investing predominantly in units of Franklin U. S. Opportunities Fund, an overseas Franklin Templeton mutual fund, which primarily invests in securities in the United States of America. The fund principally invests in small, medium, and large-capitalization U.S. companies with strong growth potential across a wide range of sectors.
The total asset under management for this fund is about ₹ 2733.28 Cr and a NAV of ₹52.54 as of 16th Feb 2021. It is one of the most consistently performing fund with more than 20% annualized return since inception in 2013. Since its entire portfolio is equity, the risk involved is high (Standard deviation 19.62) but at the same time, it has a very good risk-adjusted return ratio such as Sharpe ratio (0.99), Sortino ratio (1.64), Treynor’s ratio (0.84) and a lower expense ratio of 0.6%. All of these features make it one of the best performing International fund you can invest in if you are targeting the US market.
Edelweiss Greater China Equity Off-shore Fund:
It is an open-ended fund scheme investing in JPMorgan Funds. The main objective of this fund is to provide long-term capital appreciation by investing predominantly in the JPMorgan Fund’s – Greater China Fund. Greater China Fund is an equity fund that invests primarily in a diversified portfolio of companies that are incorporated or which have their registered office located in or carrying out the main part of their economic activity in a country of Greater China region.
This fund has been performing consistently and has produced more than 30% annualized return over the last 5 years. The total asset under management for this fund is about ₹ 1033.22 Cr and a NAV of ₹67.13 as of 16th Feb 2021. The fund invests mostly on equity (97%) and debt (2.9%). The risk associated with this fund is high (Standard deviation 19.99) but it also has a very good risk-adjusted return ratio such as Sharpe ratio (1.0), Sortino ratio (1.50), Treynor’s ratio (0.45), and the expense ratio is 1.49%.
PGIM India Global Equity Opportunities Fund:
It is an open-ended mutual fund scheme that invests in companies all over the world without any restrictions to any specific country or a sector. The main objective of this scheme is to generate long-term capital appreciation from a diversiﬁed portfolio of overseas mutual funds. The scheme will mainly invest in the units of PGIM Jennison Global Equity Opportunities Fund (the Underlying Fund), and or similar mutual funds, having an investment objective, strategy & risk profile similar to the underlying fund. USA (61.4%), China (12.2%), France (12.5%), Netherlands (4.7%), Cannada (3.9%), Italy (3%), Switzerland (1.8%) etc, are the counties you gain exposure to by investing in this fund. This scheme also gives you an opportunity to have a truly diversified portfolio as it invests in various sectors across the globe. This fund has also been performing consistently and has produced more than 25% annualized return in the last 5 years.
The total asset under management for this fund is about ₹769.23 Cr and a NAV of ₹41.7 as of 16th Feb 2021. The risk associated with this fund is 17.76 (Standard deviation ) and has a very good risk-adjusted return ratio such as Sharpe ratio (1.39), Sortino ratio (2.64), Treynor’s ratio (1.46), and the expense ratio is 1.34%.
International Mutual provides a new avenue for investors to gain exposure to the global market. With new investors becoming increasingly aware of investment options the need for portfolio diversification is greater now than ever before hence International mutual funds are becoming an integral part of a portfolio. While International mutual funds can be used as a hedge or a form of long-term investment one should always be conscious of the high risks involved in such schemes and should short list the funds based on their risk appetite.