Most of the international funds in the country invest in the US and UK. The new funds, at first glance, offer Indian investors an opportunity to diversify and invest in emerging markets and European markets. But does a regular investor need such foreign funds?
Siddharth Srivastava, Head of Product – ETFs, Mirae Asset Management India says, “Different markets have different risk and return profiles and provide opportunities that may not be available to investors in our domestic market. explains that there are two reasons behind investing in foreign markets. “First, investors want to take a broad market exposure to a single country or a region or a group of countries representing a category. Secondly, investors are now becoming increasingly aware of various emerging and disruptive technologies and other topics and about them. future prospects. They want to invest in portfolios that provide access to companies that cater to such domains,” says Siddhartha Srivastava.
Taking a look at the international fund category, you will come to know that there are a variety of schemes in the basket. There are funds investing in the Chinese markets in the United States. Or they may be investing in commodities or tech or gold. Investors need to be careful about the kind of schemes they are choosing. Mutual fund managers say that new age technology and changing global scenario have led to the launch of different types of new global funds.
“Domains such as Fintech, E commerce, Cloud, AI, Electric and Autonomous Vehicles, IoT, etc. are gaining traction. While we have seen run-ups in many companies involved in the above disciplines, yet from a long-term perspective, they are growing. can provide significant potential for
Mutual fund planners and advisors say that the trend in the global markets leads to the launch of new schemes. Retail investors need to add these funds to their portfolio only if their investment strategy aligns with these themes.
Founder Harshad Chetanwala says, “Most of the international funds currently available to investors are US-based funds, so the new funds allow diversification across different geographies as well as invest in companies from different sectors.” MyWealthGrowth, a wealth management firm based in Mumbai. However, he says retail investors can consider allocating up to 10% depending on their appetite and current portfolio.
“Within international portfolios, investors can split between US and non-US based funds. However, investors should first aim to build a strong India-based portfolio and then diversify into international funds. Invest in specialized international funds only if you understand the market and its workings or take the help of a planner,” says Harshad Chetanwala.
Opportunities in the global market come with their own risks and potential rewards. While correlation can reduce the risk of the overall portfolio, on a standalone basis, the product can be risky and only suitable for high-risk investors. The investor is additionally exposed to regulatory, geopolitical, currency risk among others. Investors should always remember this before investing.