Dhirendra Kumar mentions the importance of having international exposure and also names a relevant fund
14-May-2018 •Research Desk
I want to know two good liquid funds and an overseas fund.
You don't need my advice for liquid funds. A good liquid fund and not-so good liquid fund will not make a huge difference. I would suggest you to look for the best performing fund based on the last one and half to two years performance. Look at the first quartile and choose the fund which has the lowest expense ratio. Return being unpredictable, expense being predictable, the cheapest one will actually do better. The low cost in a liquid fund becomes meaningful because if a fund is charging half per cent in comparison to quarter per cent which the other fund is charging, you could be sure that it has a 25 basis point advantage. If it does poorly, that is the cushion.
Looking at international funds, there are plenty to invest, but the best ones are which gets you great diversification. One fund which I like is Parag Parikh Long Term Equity Fund. It has invested nearly 30 per cent in select American companies which I think is a great selection. That is the only fund whose top holding is Alphabet, the company which owns Google and that is about 10 per cent position. I strongly feel that international diversification is important for Indian investors because most investors haven't taken to this idea as Indian market have been doing well or there is always a home bias. My general sense is that you should always diversify and when it comes to international diversification, you should be selective. The other thing in India which has worked very well is Nasdaq 100. One thing which is very important about investment is that the company should be best of its class. American companies has 60% dominance in Nasdaq 100 and low expense despite the mortality. This makes it attractive.