- What are international mutual funds?
- Shall you invest in these funds? If so then how much - Read this post to know all
International funds are mutual fund schemes that are managed by Indian mutual fund companies and enable an Indian citizen to invest in the same. There are country-specific actively & passively managed international funds that are available in India. One can invest in funds from countries like the U.S., China, Japan, ASEAN, and emerging market funds. Companies such as Google, Apple, Amazon, Alibaba are household names and these funds give us an opportunity to invest.
These funds have caught the fancy of many in the last two years owing to a strong performance and better returns than funds investing in Indian stocks. This has led to a surge in investments in international funds. Leading this pack has been U.S. based funds due to a great run in stock markets in the United States. We decode the best international funds for you here.
These are the top 3 picks:
Franklin India Feeder Franklin U.S. Opportunities Fund
This is a fund from Franklin Templeton Mutual Fund, and it further invests in the Franklin U.S. opportunities fund based out of the United States. This fund was among the first international funds to be launched in India and has exhibited a consistent track record over the years. Another advantage of this fund is that one gets the expertise of Franklin Templeton Mutual Fund which is a U.S. based asset management company with deep knowledge of the American economy and stocks.
ICICI Prudential U.S. Blue chip Equity Fund
As the name suggests, this fund invests in the blue chip or the largest companies listed in the United States. The portfolio of this fund comprises names such as Amazon, Boeing, Kellog, Facebook, Bank of America, Google, etc, which are among the largest corporations in the world and global leaders. It is a good choice since one gets exposure to some of the best companies in the world through this fund.
Edelweiss Greater China Equity Offshore fund
This fund is again a feeder fund i.e. money collected in India is invested in the JP Morgan Funds-JF Greater China Equity Fund. Edelweiss AMC and JP Morgan have a collaboration in running this fund. As we know China has been one of the major growth engines of the world and is the second largest economy in the world. Through this fund, one can own names like Alibaba, Tencent and some other large Chinese companies. This fund has a stellar track record and presents a good investment opportunity.
PERFORMANCE OF THESE INTERNATIONAL FUNDS:
Let us see how these funds have performed in different time periods (all returns are in %)
|Fund Name||Last 1 year||Last 3 years||Last 5 years|
|Franklin U.S. Fund||27.25||16.92||12.73|
|ICICI U.S. Fund||31.78||20.93||13.86|
|Edelweiss China Fund||37.55||16.67||8.94|
As we can see these funds have delivered handsome returns and can be a good option. Investment in international funds also acts as a diversification from Indian stocks. So, in times like the last 3 years when Indian markets have not done that well, having one or more of these funds in the portfolio would have certainly helped. However, one also needs to understand the risk associated with investing in these funds. The first rule of any investment is that the investment avenue should be understandable. Many of us might not understand how the U.S. or Chinese stock markets and companies function. Therefore, we would suggest an investment of 5-20% of your portfolio in these funds and not more. One can decide the % investment basis of his/her risk appetite and know-how of these markets.