I have been investing for the past 3-4 years for my long-term goals such as retirement and do not have investments in any international fund. Should I start with 5-10 per cent investments in international funds? How important are international funds for diversification, especially when this year Indian markets have underperformed most international markets. Also suggest some good international funds other than gold. — Suresh Karthik
Investing in international funds will diversify your risks better though not necessarily enhance returns. The best way for Indian investors to gain international exposure while retaining the benefit of tax-free returns from an Indian equity fund is to invest in diversified funds which can invest up to 35 per cent in foreign markets like Templeton India Equity Income Fund and Fidelity International Opportunities Fund.
Most international funds available in India now are geographical or thematic funds - international commodity funds, oil funds, gold funds etc. These are complicated products that require investors to be knowledgeable enough to take a call on some particular theme, sector or geography. So tread carefully.
This article was originally published on September 20, 2011.
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