Should Indian’s go for global funds?
Global funds invest in international
companies and/or mutual funds investing in international companies. Some of
these funds can also choose to focus on investing in international companies operating
in a particular sector. Few funds are hybrid i.e. they invest a part of their
money in Indian companies and remaining portion of their money n international
companies.
What are global/international funds?
Global funds are mutual funds that
invest their money in companies located in other countries. They can also
invest their money in a particular region, like Asia. They may also choose to
invest their money in companies operating in a particular sector like
infrastructure.
What is their investment scope?
These funds invest in international
companies and/or mutual funds investing in international companies. Some of
these funds can also choose to focus on investing in international companies
operating in a particular sector. Few funds are hybrid i.e. they invest a part
of their money in Indian companies and remaining portion of their money n
international companies.
What are their advantages and
disadvantages?
International funds have their own
pros and cons. Here are some of them:
Pros:
- An excellent diversification for your portfolio
- Ability to invest in international companies with
smallest possible investment
- Investing abroad is simpler, since you just have to
fill out the form, and submit the payment in Indian rupees to the fund
house
Cons:
- High charges
- Currency exchange risk as you may lose money at the
time of converting your profits from the foreign currency into Indian
rupees
- No tax benefit that is normally offered to the
investors in regular mutual fund
- Very volatile as the NAV depends on the performance of
stock markets in the native countries of the companies
- May take a long time to recover your investment as high
charges and performance of stock markets affect the NAV
Is it for me?
If you are willing to take risks in
order to earn higher returns then this investment is right for you. Are you
patient enough to wait and watch your investment grow? Can you withstand the
high volatility across the stock markets in different countries? Are you ready
to pay tax on any profit earned from this investment? If you have answered yes
to these questions, then go ahead and invest in these funds. however do watch
the charges and take care to ensure you choose a fund with a good track record.
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