MNC mutual funds are thematic funds that invest the majority in the MNC theme. These funds are more diversified than a sector fund that focuses only on a particular sector. Multinational companies are global companies that have subsidiaries in India. For example, from the United States, United Kingdom, South Korea, Japan, Germany, France, etc.
List of Top 4 MNC Funds to Invest in 2023
|Fund Name||AUM||3 Years Return|
|ICICI Prudential MNC Fund||1304 Cr||23.10%|
|SBI Magnum Global Fund||5371 Cr||16.60%|
|UTI MNC Fund||2405 Cr||10.80%|
|Aditya Birla Sun Life MNC Fund||3156 Cr||4.40%|
Who Should Invest in MNC Funds?
MNC mutual funds are theme-based equity mutual funds that invest majorly in multinational companies. These funds have no restriction to invest across a single market, however, they will invest only in the theme. Thus, the fund manager identifies promising MNC companies to be part of the fund portfolio. Best MNC funds are ideal for a long-term horizon (for a minimum of five years).
Best MNC funds aim long term capital appreciation by focusing on the multination companies theme. Since the fund portfolio is well diversified across the theme, the portfolio may be a high-risk investment.
As this is a theme-based fund, the fund manager has a limited pool of stocks to pick for the portfolio. Furthermore, MNC mutual funds are highly sensitive to economic and political risks. Thus the allocation of too much of your investments to these mutual funds is not an advisable strategy. Since these are high-risk investments, only if you are confident about the MNC theme should you consider investing in them. Otherwise, it is advisable to invest in well-diversified mutual funds.
How to Calculate MNC Fund Returns
Using Scripbox’s SIP calculator and Lumpsum calculation tool, let’s estimate the potential returns from the best MNC fund. Let’s assume Mr Sachin plans to invest in UTI MNC Mutual Fund. He can either invest INR 10,000 per month through the SIP route and plan to increase investment by 10% yearly. Or INR 3,00,000 as a lump sum. His investment tenure is 10 years. Let’s look at the potential returns for both scenarios.
By investing INR 10,000 per month and with a 10% step up each year, Mr Sachin can potentially generate INR 38,31,144 for a total investment of INR 19,12,416 (at a CAGR of 14.40%).
By investing INR 3,00,000 as a one-time investment, Mr Sachin’s investment value at the end of the investment tenure (10 years) may potentially be INR 11,51,814.
Note: The return estimation is based on past performance. This doesn’t guarantee any returns.
How to Choose the Best MNC Mutual Funds?
The following are the parameters that you must consider while choosing the best MNC funds:
While picking the best MNC mutual funds, you need to ensure the fund’s investment objective aligns with your investment goals. Since these are theme-based funds, the slightest mismatch in the alignment may not lead to desirable consequences. Thus, you need to analyze your investment goals and determine if they align with the fund’s investment objective.
Furthermore, since MNC funds focus on a theme, they require a long-term investment horizon. Therefore, ensure that you have a long-term investment horizon and the theme aligns with your goal.
Since MNC mutual funds invest majorly in multi-national companies (theme), you need to be aware of the potential risks. Though the businesses are more or less, their performance depends on many macro and micro economic parameters. At the same time, these stocks have the potential to generate growth. Thus, analyze the portfolio holdings and check if the investment objective aligns with your goals.
Mutual funds are market-linked securities and hence do not guarantee returns. Thus investing based on historical performance alone is not the right strategy. However, historical returns are a good estimate to understand the performance of the fund over a period of time. Comparing returns over time and against benchmarks and peers will help in understanding the fund’s stability. A fund that consistently outperforms its category and benchmark is a suitable investment if all the other parameters are also in its favour.
Mutual fund performance ratios help in analyzing the fund’s performance and volatility against its benchmark. Ratios like standard deviation, beta, Sharpe ratio, Treynor’s ratio, etc., are some of the performance ratios that you can consider.
The expense ratio is the fees that an AMC will charge for managing the fund. This percentage plays a role in the overall returns from your mutual fund investments. Thus, a higher expense ratio will certainly lower your overall returns. Hence, when choosing the best MNC fund, you should pick a fund with a lower expense ratio.
Frequently Asked Questions
MNC mutual funds are funds that invest in multinational companies. These are businesses that have their parent company outside of India. The parent company operates from a global location, while the Indian subsidiary operates from India. The Indian subsidiaries manufacture and sell their goods and services in India and as well export to other countries. Thus, these MNC companies have good revenue and profits.
Multinational Companies (MNCs) are listed in India and follow the same set of rules and regulations as any other Indian company. Some of the leading listed MNC companies are Colgate, Nestle, P&G, Bosch, etc.
MNC funds are taxed like equity mutual funds. The short-term capital gains are taxable at 15% when the investment holding period is less than one year. When the holding period is more than one year, the long-term capital gains above INR 1,00,000 are taxable at 10%.
Markets are highly volatile and there is never a good time to invest in them. Systematically investing for the long term will help in averaging out the market volatility and generate long-term wealth.
Yes, MNC mutual funds are high-risk investments. Since these schemes invest only in a certain theme, the risk is higher than a pure large-cap fund or a well-diversified mutual fund.
To generate high growth, it is advisable to invest in the long term. Investing for the long term will help in averaging out the market volatility and generating wealth. Thus, a minimum of 5 years is the advised investment period for MNC mutual funds.
MNC mutual funds invest in multination companies. These companies have a global parent company operating in a foreign location. The fund invests in the Indian counterparts of these multinational companies.
Thematic mutual funds are suitable only for those investors who want to invest in a theme. Since they are focused and invest in a theme, they are highly risky and volatile. Thus, investors with specific goals and objectives seeking MNC company exposure must invest in MNC mutual funds.