Std 8 Home Learning Study materials Video |Standard 08th | DD Girnar-Diksha Portal Video @ https://diksha.gov.in | the Year 2020-21
What are international mutual funds?
International mutual funds are those, which predominantly invest in the equity, equity related instruments and debt securities of companies/entities listed outside India. Many of these funds are actually fund of funds schemes, whose underlying foreign funds invest in foreign markets.
Why invest in international mutual funds?
Provides access to high growth companies not listed in India
High growth companies also exist in economies posting lower growth than India
Enables portfolio diversification through exposure to international markets
Provides strong hedge against rupee depreciation (rupee depreciation increases returns from international funds)
Many of the International markets have low correlation with the Indian market
Reduces the risk to the overall portfolio from adverse domestic events as turmoil in domestic markets rarely impact global markets
List of 10 Best International Funds for 2021
1. DSP Global Allocation Fund
Open ended Fund of Fund scheme investing predominantly in units of BGF – GAF (BlackRock Global Funds – Global Allocation Fund).
May also invest in units of similar overseas MF schemes
Highlights of BGF-GAF
Aims to generate returns competitive with that of global stocks at lower volatility over a full market cycle
Invests in stocks, bonds, currencies and cash equivalents over 40 countries and 30 currencies
Follows rigorous investment process with a top-down macro strategy to decide asset allocation
Follows bottom-up approach for security selection
2. Edelweiss Greater China Equities Off-shore Fund
Fund of Fund scheme investing in the Greater China Fund of JP Morgan Fund
Highlights of JP Morgan Fund – Greater China Fund
Equity fund primarily investing in companies domiciled or carrying out their main business activities in the Greater China Region – China, Hong Kong and Taiwan
Adopts a fundamental bottom-up approach
Follows ‘best ideas’ approach of investing irrespective of listing or market
Takes high conviction approach while investing in just 50 stocks out of 785 stocks in MSCI Golden Dragon Index
3. Nippon India US Equity Opportunities Fund
Invests primarily in high quality – high growth stocks listed in the recognised US stock exchanges
Investment strategy powered by the research support Morningstar Investment Advisor India Private Ltd.
Uses Economic Moats proprietary research methodology of Morningstar i.e. companies with sustainable competitive advantages that enable them to earn excess returns over a long period of time
Uses the ‘Hare’ strategy of investing i.e. invests in companies experiencing rapid growth with sustainable competitive advantages
Uses a blend of bottom-up and top-down approach without any market capitalization or sector bias
4. ICICI Prudential US Bluechip Equity Fund
Invests in equity and equity linked securities of companies listed on recognised US stock exchanges
May also invest in GDRs/ADRs issued by the foreign and Indian companies
Invests in securities of large cap companies included in the S&P 500 index
Follows a combination of bottom-up and top-down investing approaches without any sector bias
Follows a blended approach of growth and value stock-picking
5.
ડીડી ગિરનાર ચેનલ ટાઈમ ટેબલ
9. Franklin Asian Equity Fund
Invests in Asian companies (excluding Japan but including India) having a long term growth potential without any sector or market capitalization bias
Follows an active investment strategy taking aggressive/defensive postures depending on market opportunities
Uses a combination of top-down and bottom-up investing approach
Prefers companies offering the best value with regard to their long-term growth prospects, management quality and returns on capital
10. Kotak Global Emerging Market Fund
Fund of funds scheme primarily invested in MGF Asian Small Equity Fund Class I & ishares MSCI Emerging Markets ETF
Has the freedom to shift to other overseas equity mutual fund schemes investing in emerging markets
Highlights of MGF Asian Small Equity Fund Class I
Invests in the small cap companies of the Asian and/or Pacific region
May also invest in warrants, bonds and convertible bonds by small cap companies in Asia Pacific
Highlights of ishares MSCI Emerging Markets ETF
Tracks the investment results of MSCI Emerging Markets Index, which is designed to measure the equity market performance in the global emerging markets
MSCI Emerging Markets Index consists of the top 5 emerging market indexes: China, South Korea, Taiwan, India and Brazil
How are international mutual funds taxed?
Short term capital gains booked on redeeming units before 3 years of investment are taxed as per the tax slab of the investor
Long term capital gains (LTCG) booked on redeeming units after 3 years of investments are taxed @ 20% (along with cess and surpluses, if applicable) with indexation benefits
Dividends are taxable as per the tax slab of the investor. TDS of 7.5% (till March 31, 2021 due to the Covid pandemic; usually 10%) is deducted by the mutual fund house for resident investors. Non-resident investors are subject to TDS of 20%. Tax credit of TDS deducted can be claimed during the time of filing the returns
Risks of investing in international mutual funds
Exchange rate risk: Fluctuations in foreign exchange rates, especially appreciation in the rupee, can adversely impact the returns of international funds
Foreign market risk: International funds expose its investors to the market, political and economic risks of foreign economies the fund is investing in. The risk is higher in case of investing in emerging or frontiers markets lacking in regulation framework, market efficiency and liquidity
Concentration risk: International funds with concentrated investment portfolios may suffer from higher risk, lower liquidity and higher return fluctuations
Who should invest in international mutual funds?
Investors seeking geographical diversification to reduce the risk to their overall equity portfolio
Investors seeking hedge against rupee depreciation, especially those creating corpuses for foreign education or travel
Investors with higher risk appetite and long term investment horizon of at least 5 years seeking to supplement their existing domestic equity exposure with foreign economies
Investors comfortable with significant fluctuations in their investments value
Investors comfortable with the additional political, market and economic risks associated with foreign market
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