Investing in global mutual funds is the next big thing for Indian investors. These are overseas mutual fund in Indiaoptions which deploy investments in stock markets abroad. These funds come with higher exposure to risks although there are chances of earning higher returns simultaneously. They are preferred by people as long-term and fulfilling investments. Investing in international mutual funds in India helps tap into the earning potential of various global markets and innovative business sectors and industries. You can diversify your portfolio, hedge against foreign currency exchange rate fluctuations and spread out risks. There are several innovative plans that you can consider in this regard.
While investing in global mutual funds, there are some other risks that you should consider. Currency risks should be understood carefully. While investors in India will deploy their money in rupees, the mutual fund house will be taking exposure to global stocks in various nations. Investors should be fully prepared for risks linked to global currency fluctuations. These fluctuations may impact the overall NAV or net asset value of an international fund. For instance, if the rupee value comes down against the dollar rate, you will get more rupees to spend for every dollar that you have invested in the nation. The NAV may be higher in this case. However, if the rupee appreciates greatly against the dollar rate, then you will have lesser rupees to spend for each dollar that is invested there. The NAV will be impacted likewise.
Political risks are also linked to investments in global mutual funds. These risks revolve around unrest or inability of the Government in a particular nation to tackle instability. The scenario makes markets less attractive for opportunities pertaining to investments since there are political uncertainties likewise. This may lead to lower currency values and a market drop. There are specific economic risks to be considered as well. They involve changing market demand and supply equations in several foreign nations. A negative shift for overall demand will lead to a drop in prices and will put any business at risk swiftly. This will also create lower margins for profits while reducing income and impacting the entity’s ability to service overall debt. The aftermath may also negatively affect the investment that you have made. Investors should be more cautious before putting investments down in foreign markets. They should take all possible risks and other factors into consideration. The goal should be to ensure that the funds remain safe and are invested in a suitable market for earning the best returns.
Global mutual funds come with their own sets of risks but there are distinct advantages as well. You should do your research thoroughly before allocating a part of the portfolio to international mutual funds.