Have you always been mesmerised by German cars, Japanese electronics, and the legendary MAANG companies of the United States? You can be a part of their success and make a good fortune by investing in international mutual funds. These mutual funds majorly invest in the debt and equities of foreign nations. With worldwide diversification, you can spice up the recipe of your portfolio with some of the strongest stocks across the globe. The following article covers the nuts and bolts of investing in mutual funds.
Types of international mutual funds:
1. Country funds
A Country Fund invests in the stocks of one particular country. Investing in these mutual funds can help you profit from the country’s overall economic progress.
2. Thematic international funds
Thematic International Funds invest in sectors of a specific theme. Their basket of securities contains profitable stocks of a single industry. Hence, if one is bullish about a sector like FinTech or Petrochemicals of a particular country, one can invest in thematic mutual funds.
3. Regional funds
Regional funds target the securities of geographical areas like Europe, Asia-Pacific, Latin America, etc. That fund’s portfolio is diversified with the best-performing sectors of that region.
4. Global markets funds
Global Markets Funds invest in stocks from all over the world. The portfolio is created by identifying key sectors in each country and provides proper geographical diversification.
Why invest in international mutual funds
1. Balancing risk
Globalising your investment portfolio helps you balance the overall risk. For instance, India’s Stock Market has a low correlation with the US Stock Market. Hence, a crash on Dalal street doesn’t stop one from bagging profits from US investments.
2. Foreign exchange benefits
When the value of the Indian currency depreciates, your foreign investments become powerful. This way, you not only earn from your profits but also from appreciating foreign currency.
3. Best of both worlds
It is less likely for industries to collapse together. Hence, when one economy goes down, it doesn’t create a domino effect on your investments. Along with being the best customers of some of your favorite companies, you can also be their investor. Moreover, what’s more fascinating than Netflix paying the investors more money than they pay for their subscriptions?
Other than the above-stated benefits, international funds are also known for beating inflation due to their stellar average return of 13%-14%. As top AMCs manage them, they ensure the safety and transparency of one’s investments. However, one should only invest if they have a high-risk appetite and are looking to invest long-term.