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.
Want to own a pie of Microsoft, Sony, Alcatel and various other top notch international companies? Looking to diversify your portfolio to include companies based in other parts of the world? Then you must seriously give a thought to global/ international funds. If you are not aware of them, then read on to find out more about this new, exciting investment option for you.
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.
Investment at a personal level in international funds is of a huge amount generally suited to celebrities and sportsmen who have made their mark at the international level.
It is not a good means of investment for a small salaried or self employed person who will have to wait long before he reaps benefits from investments. For a small investor, investing in the equity of new companies is a safer option.
i by all measures agree to the opinion expressed by prashanth…dont go in for international MF's as tehy are not the choice for small /self salaried employees.