3 reasons which prove investing in international mutual funds is beneficial
India's financial markets dropped sharply on Monday as BSE Sensex and Nifty fell sharply (about 3.5% each) as the rapid rise in new Covid-19 infection cases raised fears of closure. However, other world markets did not perform as well as the Indian markets. Financial advisers recommend clients hold 10-20% of their portfolios in international standards as a fence aimed at vagaries in the domestic market so that part of their portfolio remains unsafe. Global currencies are investing in companies that are exposed to large markets, with less expensive access to capital and cheaper estimates compared to their Indian counterparts. Here are three reasons why a person should invest part of his financial portfolio in international funds:
Low integration with India: Indian markets have low integration with international markets. According to the Mirae Asset Mutual Fund, Indian markets have a low 0.16% merger with the US, 0.32% with Europe, and 0.38% with China. So by investing in a joint global investment in the above-mentioned markets, the expected portfolio risk will be lower.
The emergence of new stocks: Global currencies offer investors many opportunities in new-age industries such as eCommerce, social media, electric vehicles, cybersecurity, and cloud computing among others. Amazon, Netflix, Facebook, Twitter, Louis Vuitton, Walmart, and Tesla have been commercial giants over the years. So, by investing internationally one can get exposure to these stocks. “Most of the world's companies have a strong base and competitive advantages that many Indian companies do not have. Investing in them protects the rupee, ”The Economic Times quoted Bhavesh Sanghvi, CEO, Emkay Wealth Management as saying in a statement, Sanghvi commends Invesco Global Consumer Trends Fund and PGIM Global Equity Opportunities Fund.
Geographical diversity: Investing in international currencies gives you geographical diversity. It is possible that the Indian economy may not function due to certain domestic conditions but other world economies may also function. In such a case, investing in global currencies gives the diversity of space. “Slight interaction with Indian markets, opportunities for companies in new industries, and diversification are some of the reasons for investing overseas,” the business said daily quoting Harshvardhan Roongta, chief financial planner, Roongta Securities. "Investors can contribute 10-15% of their portfolios to the global fund," Harshad Chetanwala, founder, MyWealth-Growth told ET. He believes investors can opt for a combination of two currencies - one that gives them access to Asian Equities and the other from overseas technology. Other Asian-focused investors are Edelweiss Emerging markets, PGIM India Emerging Markets Equities, and Franklin Asian Equities.
What should be noted here is that many Indian investors are already investing in MF international programs. Assets in global systems available through integrated domestic funds have seen a significant increase over the past year. The value of the paper increased by 250% to 7,00,000 in March 2021 as compared to 2,00,000 in April 2020. At the same time, assets under management increased by 278% to Rs 12,408 from Rs 3,282 crore, the business mentioned daily report. But, given the sharp rally that has taken place over the past 1-2 years, some believe that investors should be careful when investing in global currencies.
Benefits of having international investments in mutual fund portfolio