International Equity Mutual Funds: Diversify And Grow Your Wealth

International equity mutual funds are an attractive option for investors who want to diversify their portfolios. They are a type of investment fund that pools money from multiple investors to purchase stocks in companies located outside of the investor's home country. These funds can provide access to some of the biggest global companies, such as Facebook, Google, and Microsoft, and offer the opportunity to benefit from the growth of these international businesses.

One of the key advantages of investing in international equity mutual funds is the potential for geographical diversification. By investing in various foreign markets, investors can reduce the risk associated with relying solely on domestic stocks and bonds. This is because different economies can perform differently over time. For example, in 2016, while the BSE Sensex in India increased by 3.91%, the US's Dow Jones Industrial Average Index rose by 15.24%.

Additionally, international equity mutual funds can provide currency diversification. Investing in foreign funds can take advantage of fluctuations in exchange rates, as the stocks are priced in different currencies. If the value of a foreign currency increases relative to an investor's home currency, their returns can be boosted.

It is important to note that investing in international equity mutual funds also carries certain risks. These include economic and political risks, as well as currency risks, which can negatively impact an investment if the foreign currency depreciates against the investor's home currency. International funds may also have higher fees and expense ratios than domestic funds, impacting overall returns.

Overall, international equity mutual funds offer investors a way to diversify their portfolios, access global opportunities, and potentially improve their returns by investing in foreign companies and markets.

International funds help you invest in some of the biggest companies in the world

International funds offer investors the opportunity to invest in some of the biggest companies in the world. They are equity funds that invest in stocks of companies listed outside of the investor's home country. For example, an international fund available to Indian investors may invest in stocks of companies listed on exchanges outside of India. This allows investors to gain exposure to global market leaders, such as Apple, Google, Microsoft, Amazon, and Facebook, which are not listed on Indian stock exchanges.

International funds also provide investors with geographical diversification. For instance, when the domestic economy is struggling, investors can leverage opportunities in other markets that are performing well. This helps to reduce portfolio risk as markets around the world rarely go down together.

Additionally, international funds can provide currency diversification. For example, if the Indian rupee has been depreciating against the US dollar, investing in international funds can turn this depreciation to the investor's advantage. When investing in international funds, investors get exposure to foreign currencies, and any appreciation in the value of those currencies will increase their returns.

International funds also allow investors to benefit from the knowledge of professional fund managers who closely watch global markets and make informed investment decisions. These funds can be broadly grouped into regional funds (focused on a specific area like Europe or Asia), sector funds (concentrated on a particular business sector like technology or healthcare), or global funds that invest across multiple regions and sectors.

Overall, international funds provide investors with a valuable opportunity to invest in some of the biggest companies in the world, offering geographical and currency diversification, access to global market leaders, and the expertise of professional fund managers.

They reduce portfolio risk by diversifying investments across markets

International equity mutual funds are a great way to reduce portfolio risk by diversifying investments across markets.

Firstly, international funds provide geographical diversification. Different economies perform differently over time. For example, the Indian economy might be struggling while the US, UK, Chinese or Japanese economies are booming. By investing in international funds, you can take advantage of opportunities in these markets when your domestic economy is underperforming.

Secondly, international funds offer currency diversification. For example, the Indian rupee has been depreciating against the US dollar over the years, due to factors such as political instability, rising inflation levels and weak fiscal policies. By investing in international funds, you can benefit from any appreciation in the value of foreign currencies or depreciation in your home currency.

Thirdly, international funds can reduce portfolio risk by diversifying across sectors and asset types. For instance, some international funds focus on specific sectors such as technology or healthcare, while others invest in a mix of stocks and bonds. This allows investors to access companies and businesses that may not be available or well-represented in their domestic market.

Finally, international funds can provide exposure to global market leaders such as Apple, Google, Microsoft, Amazon and Facebook. These companies are not listed on Indian stock exchanges, so investing in international funds is the only way for Indian investors to gain exposure to these businesses and share in their profits.

In summary, by investing in international equity mutual funds, you can reduce portfolio risk by diversifying your investments across markets, currencies, sectors and asset types. This allows you to take advantage of global opportunities and potentially improve your overall returns.

They can be a good option for investors with a long-term horizon

International equity mutual funds can be a good option for investors with a long-term horizon. These funds can help investors with long-term goals such as retirement or a child's education. A long-term investment horizon protects investors from the volatility of equity markets and allows them to benefit from compounding returns.

• Geographical Diversification: International funds provide investors with exposure to global markets and companies, allowing them to invest in various foreign markets. This helps investors leverage opportunities in different markets and reduce the risk associated with relying solely on the performance of the domestic market.
• Opportunity to Invest in Global Market Leaders: International funds give investors the chance to invest in some of the biggest and most successful companies in the world, such as Apple, Google, and Microsoft. By investing in these companies, investors can benefit from their growth and profitability.
• Currency Diversification: Investing in international funds can help investors take advantage of currency fluctuations. If the value of the foreign currency appreciates or the home currency depreciates, investors can benefit from increased returns.
• Professional Management: International funds are managed by experienced professionals who closely monitor global markets and make informed investment decisions. This can be beneficial for investors who may not have the time or expertise to research and analyze global investment opportunities.
• Potential for Better Returns: While past performance does not guarantee future results, international markets, particularly in emerging economies, can offer strong growth potential. By investing in international funds, investors can capitalize on the long-term growth prospects of developing economies.

When considering international equity mutual funds, it is important to keep in mind the associated risks, such as currency risk, economic and political risk, and higher fees. Conducting thorough research and consulting with a financial advisor can help investors make informed decisions that align with their investment goals and risk tolerance.

They offer geographical diversification

International mutual funds offer geographical diversification, which is one of the biggest advantages of investing in them. Different economies perform differently over time. There may be times when the Indian economy is struggling, but the US, UK, Chinese, or Japanese economies are booming. International funds allow you to take advantage of these booming markets while your domestic economy may not be generating good returns. Thus, by spreading your investments across geographies, you achieve diversification on a global scale.

International mutual funds can be classified into three categories:

• Thematic International Funds: These funds are similar to domestic thematic mutual funds, where the fund follows a theme-based investing approach. For example, a domestic thematic fund with infrastructure as its theme will invest in the stocks of cement, power, and steel companies. Similarly, an international thematic fund will invest in the stocks of foreign companies within the concerned theme.
• Region or Country-Specific Funds: These funds invest in the stock markets of a specific region or country. For example, a fund that only invests in US stock markets or a fund aimed at investing only in Asian markets. The main motive is to capitalise on the opportunities generated by these markets to reap good returns.
• Global Markets: These funds are the opposite of region or country-specific funds. Instead of focusing on a specific country or region, they invest globally. They have a portfolio of stocks from companies worldwide, allowing them to leverage opportunities in different markets simultaneously. The main goal here is diversification. Even if one market does not perform well, investments in other markets can make up for the loss.
• Franklin India Feeder: Franklin U.S. Opportunities Fund: This fund invests in the Franklin U.S. Opportunities Fund, giving Indian investors exposure to high-quality US companies across different industries.
• ICICI Prudential U.S. Bluechip Equity Fund: This fund focuses on investing in large-cap US companies with a track record of steady success and sound foundations. It gives Indian businesses a way to gain exposure to the security and growth prospects of the US market.
• Edelweiss U.S. Technology Equity Fund: This fund invests in US technology companies, exposing Indian investors to the innovative and fast-growing tech sector in the United States.
• Mirae Asset S&P 500 Top 50 ETF Fund of Fund: This fund tracks the performance of the top 50 companies in the S&P 500 Index, exposing Indian investors to some of the biggest and most successful US companies across different industries.
• Nippon India Japan Equity Fund: This fund invests in Japanese shares, giving Indian buyers access to the growth prospects of one of the world's biggest and most technologically advanced countries.

They give you the chance to invest in global market leaders

International equity mutual funds give investors the chance to invest in global market leaders. Some of the biggest companies in the world, like Apple, Microsoft, Amazon, and Google, are not listed on Indian stock exchanges. By investing in international funds, you can gain exposure to these companies and own a share of their profits.

For instance, the Edelweiss US Technology Equity Fund invests in US technology companies, allowing Indian investors to get in on the action of the innovative and fast-growing tech sector in the United States. Similarly, the Motilal Oswal Nasdaq 100 Fund of Fund tracks the success of the Nasdaq 100 Index, which consists of the 100 biggest non-financial companies listed on the Nasdaq Stock Market, including tech giants like Apple, Microsoft, Amazon, and Google.

Another example is the ICICI Prudential U.S. Bluechip Equity Fund, which focuses on large-cap US companies with a track record of success and sound fundamentals. This fund gives Indian investors exposure to the security and growth prospects of the US market.

International mutual funds allow you to invest in global market leaders across various sectors and countries. For instance, the DSP World Energy Fund is a sector-focused fund that invests in global energy companies, while the Nippon India Japan Equity Fund invests specifically in Japanese shares, giving Indian investors access to the growth prospects of one of the world's biggest and most technologically advanced countries.

By investing in international equity mutual funds, you can become an owner of some of the biggest and most successful companies worldwide, diversifying your portfolio beyond Indian stocks and giving you a chance to benefit from the growth and success of global market leaders.

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