An international equity fund will play an important role in your investment journey. Let us read and understand the reasons to invest in Global funds along with a few recommendations
First, let us understand what a Global Fund is.
Global funds give you the power to invest anywhere in the world including in your own country. It helps in identifying best investments from a Global universe of Securities. They can be passively managed as well. You can empower your portfolio with more diversification. When considering international investments, global funds will help in mitigating the risk.
Markets are divided into developed markets, emerging markets and frontier markets, where each category includes countries with their own category and risk.
For the greatest opportunities of return, one should select the emerging markets since the countries are the largest and fastest-growing economies in the world the return becomes higher.
Like investing locally in Mutual Funds you have 2 options, either to chose equity funds or debt funds, globally also you can choose Global Debt, or Global Equity funds.
Global Debt
With lots of funds in the Global Debt Category, some high-profile representative funds include the Vanguard Total International Bond Index Fund, which has over $142 billion in net assets as of late June 2020; the American Funds Capital World Bond Fund, which has over $13 billion in net assets; and the PIMCO International Bond Fund, with net assets of over $11 billion.
With different features and allocations of the Global Debt Funds, each invests in various diversified portfolios of U.S. and non-U.S. fixed-income securities.
Global Equity
With Global Equity fund you can buy stocks domestically and around the world, and come in hundreds of combinations of guiding philosophies, allocation strategies, and management styles.
Major funds included in the large-cap global equity space are, the American Funds New Perspective Fund, having net assets of over $95 billion as of late June 2020; American Funds Capital World Growth and Income Fund, net assets $91.2 billion; and First Eagle Global Fund, which manages over $41 billion worth of assets.
The Big Question?
Does a global fund matter in your Indian portfolio? The answer is simple, my friend. I have given you several reasons why an international equity fund will be a great value add in your investment journey. Take your pick:
India’s GDP growth is slow and will help it get back in shape by over a quarter or two. Indian equity rallies are becoming increasingly narrow. US equity markets do not have such issues. And hence they become attractive.
Global giants such as Google, Facebook, Amazon, Microsoft, and Tesla have also become increasingly household names in India. If you are spending hours together on Facebook and WhatsApp, using Microsoft to buy online on Amazon and run your computer, then ownership of their shares is common knowledge.
It is easy peasy! You can buy their shares with the press of a button and it will not take more than 10 minutes to connect your bank account to a domestic AMC which is offering funds that invest in these companies.
It is also convenient. You buy these shares in Indian rupees through a fund. Remember, the Reserve Bank of India allows you to invest up to $ 250,000 per year in foreign assets.
How are earnings growing among global tech giants and American Fortune 100 companies? Year on year and quarter upon quarter, my friends, just look where and how the winds are blowing.
The earnings at Google, FB, Microsoft, Amazon, and Tesla have worked generously over the past decade and these companies are now running global businesses.
Typically, the US market falls short during a bear phase compared with Indian stocks, and the ownership of such equity funds with these stocks will serve as a proverbial cushion for your Indian portfolio.
Here are a few more funds that you can look upon:
Franklin Feeder Fund Franklin US Opportunity Fund: Outstanding performance over the long term. Excellent portfolio of tech and on-ground US businesses.
- ICICI Prudential US BlueChip Equity Fund: Excellent diversification into top stocks related to the list of US Fortune 100 companies.
Motilal Oswal Nasdaq 100 ETF / FoF: If you believe in the global technology story, this is your go-to fund.
Now, here are some things you should check for Global Funds Management
International funds should have a track record of at least five years of investment so that you know that the fund manager has gone through at least one bull or bear cycle, preferably both.
Do not buy new fund offers promising global investment.
10-15 percent should be a global fund of your domestic portfolio.
Select the DIRECT route and GROWTH Option.
And finally, look at the expense ratio. This is what the fund charges you for every year whether you make money or not. The lower the ratio, the better the fund.
Global funds review and key takeaways:
A global fund is a fund that invests in companies located anywhere in the world including the investor’s own country.
Global funds seek to identify the best investments from a global universe of securities.
A global fund might be focused on a single asset class or allocated to multiple asset classes.
