Investing in the Indian mutual funds is a great way to create wealth in the long-term. That said, a lack of the presence of world tech giants like Amazon, Apple, and Google has always been a dampener in the minds of many existing and prospective investors. While this situation can be circumvented by investing directly in overseas stocks, the issue of reliability is a major factor that puts off most investors.
However, there’s an answer to this long-standing impasse – international funds. One of the best, if not the best, ways to get exposure to overseas stocks is by investing in international funds. Here’s an in depth look at this category of mutual funds and how it can help you out in your investment journey.
What are international funds?
Also known as international mutual funds, international funds are essentially equity-oriented mutual funds that invest the funds of investors in stocks that are listed on exchanges outside India. These funds give you exposure to companies that are listed in other countries such as the USA and the UK, among others.
Why should you invest in international funds?
Now that you’re aware of what international mutual funds are, let’s take a look at some of the reasons why you should invest in them.
1. You get to invest in global leaders
Since international mutual funds allow you to invest in overseas stocks, you get to enjoy portfolio exposure in global leaders and tech giants like Amazon, Google, Apple, Microsoft, and Facebook. By investing in such well-known and profitable blue chip companies, you can effectively increase the chances of getting higher returns on your investment. The ability to invest in such global leaders can inevitably bolster your long-term wealth creation potential.
2. Get exposure to multiple countries
With international funds, you not only get to invest in stocks of companies listed in the U.S. markets, but also those listed in other countries. Depending on the type of international mutual fund, you get to enjoy exposure to both developed and emerging countries across the world. There are plenty of mutual funds that offer exposure to lucrative and untapped Asian markets other than India, such as Taiwan, China, and South Korea.
3. Diversify and stabilize your portfolio
Diversification is another major benefit that comes with investing in international funds. Since the economic and financial conditions of the world markets are not generally all aligned in the same direction, you can effectively diversify your investments by investing in the stocks listed in multiple countries. For instance, if the Indian economy is facing a downturn, the U.S economy need not necessarily face the same situation. In fact, it might even be enjoying an uptrend instead. And by exposing yourself to overseas stocks, you can effectively counter investment risks and bring about some much needed stability to your portfolio.
Additional Read: Investing in International Funds for Portfolio Diversification
4. Benefit from the depreciating INR
The Indian stock markets are closely linked with the Indian rupee and enjoy a positive correlation. This effectively means that when the INR appreciates, the stock markets are likely to go up and when the INR depreciates, the stock markets are likely to tumble down.
That said, a depreciating rupee is not always bad. In fact, when you invest in international funds, you actually get to enjoy gains when the rupee depreciates. This is primarily due to the fact that when the INR falls, the foreign exchange currency conversion factor goes in your favour, thereby increasing the returns on your overseas investment.
5. Be a part of the growing world economy
The global economy is seeing a meteoric rise. Thanks to the contributions of both developed and emerging markets, the entire world’s economy is enjoying exponential growth. Investing in international mutual funds is a great way to be a part of this growth process, since it gives you a strong avenue to increase the returns generated by your investments.
Additional Read: Why is international investment important for Indian investors?
With a diversified portfolio that comprises a wide range of companies across multiple countries, international funds allows you to reduce your risk and gives you a way to create long-term wealth. Explore international funds on Moneyfy now!