The category of international funds has been on the rise with 32 funds on offer currently, with a slew of products on the anvil going by the filing list with Sebi. The advantage of investing in these funds is by now well entrenched and demonstrated with several schemes doing extremely well. The big benefit of investing in such schemes continues to be diversification and the greater the diversification, the more uncorrelated a portfolio will be. Take for instance rising oil prices. It is bad news for a net importer of oil like India, which impacts the Indian markets. However, the same is of advantage for a resource-rich country like Brazil. Imagine what a fund with investments in Brazil could do to your investments.
Moreover, these funds provide the opportunity to invest in the booming economies of the world. Of course the currency exchange risks remain, but overall investing in international mutual funds has its advantages. There are two broad segments in which international mutual funds can be slotted – geographical diversification and theme focus. The options for investors just got wider as several funds have filed for application with the market regulator, which literally allow you to invest across most geographies.
On the other hand themes such as agriculture, commodity, real estate, energy, mining and gold offer ample thematic options for investors to invest in. Currently, the 32 fund schemes collectively have assets worth Rs 2,847 crore in these funds with the maximum investment finding its way into DSPBR World Gold, which managed Rs 764 crore as on December 31, 2012. Geographically, Rs 338 crore has found way to the US followed by Rs 235 crore to Brazil. The number of funds focusing on Latin America is on the rise and among the schemes that have been filed a Russia-focused fund scheme, HSBC Russia Equity Fund, is something to watch out for as it will be a first of its kind. For investors, the growing list of international funds increases the choice of investing in this category of funds.
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