InvestorQ : What are the foreign fund in mutual fund category and how to invest in them?
divya Sing made post

What are the foreign fund in mutual fund category and how to invest in them?

vani Patil answered.
2 years ago

International funds of funds are mutual fund schemes that primarily invest in stocks of companies located outside India. By investing in international markets, these funds allow investors to benefit from international growth stories, thus boosting portfolio returns. It is a great way to diversify one's portfolio. International funds invest primarily in securities of foreign companies listed in foreign markets. But they differ on structure, the markets they invest in and the type of asset class they take exposure to.

There are international funds that invest directly in international stocks, and others that invest in international indices such as the Nasdaq or the S&P 500. There is some that act as feeder funds that invest in an identified mutual fund in the international market. Then there are funds of funds that invest in units of international funds. Thus, one can invest in the likes of Apple, Microsoft in the U.S.A., or the giant companies of China or entire Europe for a minimum amount, just like a SIP for a domestic mutual fund.

One must however understand the ways you can earn from these funds. Except for returns generated from the underlying portfolio, the final returns to the investor of an International fund are determined by currency exchange rates. So, if the fund has invested in the USA and earned 10% returns in a year, but the Indian rupee has risen against the dollar by 10%, the net returns to the Indian investor will be zero. Currency risks can increase if the domestic fund has invested in a foreign fund that has invested in a different country. So, be aware of these risks before opting for the same. 

Many of the domestic mutual fund companies today offer international funds that invest globally. There are over 40 different funds with options to invest in equities and real estate investment trusts abroad. The process is no different from that of investing in domestic funds. You need to complete your KYC formalities to opt for this. You can either invest directly through the AMC or through an agent or a brokerage house. You can choose to invest through SIP or through lumpsum. Given below are some foreign fund of funds schemes-

    • Franklin India Feeder 
    • Franklin US Opportunities Fund Growth 
    • DSP BlackRock World Gold Fund Growth 
    • DSP BlackRock World Mining Fund Growth 
    • Nippon India US Equity Opportunites Fund Growth 
    • DSP BlackRock US Flexible Equity Fund Growth 
    • ICICI Prudential US Bluechip Equity Fund Growth 
    • Franklin Asian Equity Fund Growth 
    • Kotak Global Emerging Market Fund Growth.