International FoFs are a newer category of passive funds India. These FoFs follow a passive investment India strategy by investing in passive funds India and around the globe. Yes, FoFs are funds that invest in other mutual funds. Similarly, international FoFs are passive funds India that invest in a collection of other country’s funds.
In an increasingly globalized economy, Indian investors are looking beyond domestic markets to explore opportunities abroad. One of the ways to do this is by investing in international mutual funds. International mutual funds are investment vehicles that invest primarily in assets located outside of India. These can include stocks, bonds or other securities from various countries, providing investors with an opportunity to diversify their portfolios geographically and sectorally.
Ways to Invest in International Mutual Funds from Passive Funds India
1. Direct Investment
Some fund houses in India offer international passive funds India that invest directly in foreign markets or assets. These funds provide exposure to global equity and bond markets, allowing Indian investors to diversify their portfolios internationally.
2. Fund of Funds (FoFs)
Many Indian Asset Management Companies (AMCs) offer FoFs that invest in international mutual funds or ETFs. These are passive investment India strategies that provide a convenient way to gain exposure to international markets without directly managing multiple foreign investments.
3. Liberalised Remittance Scheme (LRS)
Under the LRS, Indian residents can invest up to $250,000 per financial year in overseas investments, including mutual funds. Investors can use this scheme to invest directly in foreign mutual funds by opening an account with a foreign broker or investment platform.
4. Offshore Mutual Funds
Investors can also consider offshore mutual funds that are structured for international investors. However, this requires navigating regulatory requirements and may involve higher fees.
5. Online Investment Platforms
Various online platforms and brokerages offer access to international mutual funds and ETFs. These platforms often provide a user-friendly interface for investing in global markets.
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Fund of Funds (FoFs)
These are investment funds that invest in other mutual funds or ETFs rather than directly in stocks, bonds or other securities. International FoFs specifically invest in foreign funds, allowing investors to gain global exposure without directly purchasing international assets. Here are some examples of international FoFs:
1. Franklin Templeton International Equity Fund
This fund invests in a diversified portfolio of international equity funds, focusing on growth-oriented investments across developed and emerging markets.
2. HDFC International FoF
This invests primarily in overseas mutual funds, allowing investors to gain exposure to global equity markets while diversifying their portfolios.
3. ICICI Prudential Global Advantage Fund
This fund invests in global equity funds and aims to provide long-term capital appreciation by investing in a mix of international mutual funds.
4. Motilal Oswal Multicap 35 Fund
While primarily focused on Indian equities, this fund may also invest a portion of its assets in international equity funds, providing some level of global exposure.
5. Nippon India International Equity FoF
This fund invests in international equity schemes and aims to provide capital appreciation through diversified investments in global equities.
6. SBI International Equity FoF
This fund seeks to invest in international equity funds with the objective of long-term capital growth and diversification.
Benefits of Investing in FoFs
1. Diversification
International FoFs invest in a variety of mutual funds or ETFs, spreading risk across different asset classes, sectors, and geographies. This diversification can help mitigate the impact of poor performance in any single investment.
2. Professional Management
International FoFs are managed by experienced professionals who analyse and select the underlying funds. This management expertise can enhance investment decisions and optimize returns.
3. Simplified Investment Process
Investing in an international FoF allows investors to gain exposure to a broad range of funds with a single investment, simplifying the investment process and reducing the need for individual fund selection.
4. Access to Specialised Funds
FoFs can provide access to funds that may have higher minimum investment requirements or that are not easily accessible to retail investors. This can include international funds or niche strategies.
5. Risk Management
The structure of FoFs allows for better risk management as the fund managers can adjust allocations based on market conditions and performance of underlying funds, potentially enhancing returns and reducing volatility.
6. Cost Efficiency
While FoFs may have management fees, they can still be cost-effective compared to managing a portfolio of individual funds, especially when considering transaction costs and the time required for research.
7. Investment Flexibility
FoFs can be tailored to meet different investment objectives, such as growth, income, or capital preservation. This flexibility allows investors to choose funds that align with their financial goals.
Popular International Securities That FoFs Invest In
International FoF passive funds India invest in a range of international securities through foreign mutual funds or ETFs as listed below:
| Categories | Examples |
|---|---|
| 1. International Equities | U.S. Stocks: FoFs may invest in large-cap U.S. companies through ETFs like Vanguard S&P 500 ETF (VOO), Invesco QQQ ETF (QQQ), which focuses on technology stocks. |
| 2. Global Equity Funds | Fidelity International Equity Fund: Provides exposure to global equities outside of the U.S. Franklin Templeton International Equity Fund: Invests in a diversified portfolio of international stocks. |
| 3. Emerging Market Funds | MSCI Emerging Markets ETF: Funds that track indices focusing on emerging markets, providing exposure to countries like China, Brazil and India. |
| 4. International Bond Funds | U.S. Treasury Bonds: Investments through funds like the iShares U.S. Treasury Bond ETF (GOVT) for stability and income. Global Bond Funds: Such as Franklin Templeton Global Bond Fund, which invests in global fixed-income securities. |
| 5. Commodity Funds | Gold ETFs: Investments in funds like SPDR Gold Shares (GLD) for exposure to gold prices. Silver ETFs: Such as iShares Silver Trust (SLV). |
| 6. Sector-Specific Funds | Technology Sector: FoFs may invest in tech-focused international funds such as Global X Robotics & Artificial Intelligence ETF (BOTZ). Healthcare Sector: Investments in funds like iShares Global Healthcare ETF (IXJ) for exposure to international healthcare companies. |
| 7. Real Estate Investment Trusts (REITs) | Vanguard Global ex-U.S. Real Estate ETF (VNQI): Provides exposure to international real estate markets. |
| 8. Thematic Funds | Sustainable or ESG Funds: FoFs might invest in international funds focusing on environmental, social, and governance (ESG) criteria. |
Wrapping Up
International FoFs provide an effective way for Indian investors to gain exposure to global markets without directly managing international investments. By investing in these passive funds India, investors can diversify their portfolios and tap into growth opportunities in foreign markets. When considering such investments, it is essential to evaluate the fund’s strategy, fees and performance history.
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DISCLAIMER: Mutual Fund investments are subject to market risks. Read all scheme related documents carefully. Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Investments in securities market are subject to market risks. Read all the related documents carefully before investing. The securities quoted are for illustration only and are not recommendatory.
