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    Best International Mutual Funds in India to Invest in 2021

    International mutual funds are equity funds that primarily invest in stocks of companies listed outside India. These funds help to diversify the investment portfolio of the mutual fund and help the funds to obtain better returns by taking a higher risk associated with investing in international markets. In this article we have covered the concept of international mutual funds along with its features, types, advantages and best international mutual funds to invest.

    Learn how Scripbox Recommends funds

    Best International Mutual Funds in India to Invest in 2021

    International mutual funds are equity funds that primarily invest in stocks of companies listed outside India. These funds help to diversify the investment portfolio of the mutual fund and help the funds to obtain better returns by taking a higher risk associated with investing in international markets. In this article we have covered the concept of international mutual funds along with its features, types, advantages and best international mutual funds to invest.

    Learn how Scripbox Recommends funds

    Best International Mutual Funds September 2021

    Best International FundsScripbox Opinion
    3Y CAGR
    Till Date CAGR

    Franklin India Feeder Franklin U S Opportunities Fund (G)

    23.0%

    20.4%

    14.8%

    16.5%

    PGIM India Global Equity Opportunities Fund (G)

    30.0%

    12.7%

    18.1%

    5.9%

    22.6%

    13.9%

    18.2%

    17.8%

    19.0%

    16.3%

    -

    36.1%

    10.6%

    4.9%

    11.9%

    6.1%

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    3,600+

    AUM

    2,500+

    Cities

    2012

    Established

    How does Scripbox rate funds?

    Proprietary 4-step system to rate mutual funds

    We use a proprietary system to rate mutual funds and based on that make a recommendation or rate the fund as top ranked.

    What Scripbox recommendations mean?
    Scripbox algorithm recommends 2-4 funds for investment for an investment asset class such as large cap, diversified, liquid etc. When you invest for an objective, the algorithm suggests the appropriate asset class and funds.
    Track Record

    Track Record

    We look at consistent and long historical performance for our analysis.

    Fund Size

    Fund Size

    We look at the size of the fund with respect to other funds in the category. Larger funds are preferred.

    Sub-asset Class View

    Sub-asset Class View

    We check if the sub-category of the fund is recommended by us.

    Fund Performance

    Fund Performance

    Consistency of performance over various tenures is analysed for a relative performance stack.

    Track Record

    Track Record

    We look at consistent and long historical performance for our analysis.

    Fund Size

    Fund Size

    We look at the size of the fund with respect to other funds in the category. Larger funds are preferred.

    Impact of Interest Rates

    Impact of Interest Rates

    We check the relative interest rate risk of the sub-category of the fund. Lower the better.

    Credit Attractiveness

    Credit Attractiveness

    We check the credit quality of the underlying instruments present in the fund. Higher the better.

    Equity Funds

    Debt Funds

    Top International Mutual Funds in India May 2021

    1. Franklin India Feeder – Franklin U.S. Opp. (G)

    The investment objective of the fund is to provide capital appreciation to its investors. This is done by investing predominantly in units of Franklin U. S. Opportunities Fund, an overseas Franklin Templeton mutual fund. Franklin Templeton mutual fund which in turn primarily invests in securities in the United States of America. 

    • Expense ratio: The fund charges 1.61% of the asset under management
    • Asset Under Management: Rs 1288.19 cr
    • The minimum SIP amount is Rs. 1,000
    • Minimum Lump sum amount is Rs 5,000

    2. DSP US Flexible Equity Fund (G)

    The investment objective of the fund is to provide capital appreciation to its investors by investing predominantly in units of Global Funds US Flexible Equity Fund (BGF – USFEF).

    A certain portion of its corpus is invested in money market securities and/ or money market/liquid schemes of DSP Mutual Fund. This is done to meet liquidity requirements from time to time. 

    • Expense ratio: The fund charges 2.47% of the asset under management
    • Asset Under Management: Rs 225.00 cr
    • The minimum SIP amount is Rs. 1,000.
    • Minimum Lumpsum amount is Rs 5,000

    What are Best International Mutual Funds?

    International funds, also known as overseas funds, invest in stocks of companies that are listed in the international market. By investing in such funds, investors take an increased exposure to risk, but these funds also offer chances of a higher return.

    With the ever-changing time and increasing investor knowledge, investors have now become more educated about the various investment options across the world which help them in diversifying their investment portfolio. The diversified investment portfolio is across sectors, industries, etc. and capitalizes as per the growth of the foreign companies.

    These funds are riskier as it is difficult to understand the impact of the market movements of the particular country and its effect vis-a-vis global and economic changes.

    Who should invest in International Mutual Funds?

    1. International funds are suitable for those investors who have strong knowledge about the movements and functioning in the international markets w.r.t. Investment risk
    2. As the investment portfolio of these funds consists of equity securities of the global markets, it is not suitable for investors who are not willing to take equity market risks.
    3. The risk depends on the investor, the level of risk for a 25-year aged investor will be different from a 50-year-old investor, the cost of living on the investor, the drive to save money and build capital differs from one investor to another.
    4. Investors who are looking for diversification in their current portfolio and invest in international funds. This will ensure that their funds are invested in the securities across  foreign markets and they can take advantage of the market movements in the international market as well.
    5. Investors who have  detailed knowledge about the current market scenario and economic conditions about a region can invest in international funds.

    Types of International Mutual Funds

    1. Global Funds

    Global funds and international funds are not one and the same thing. A global fund is a fund that invests in companies that can be located anywhere in the world, whether the investor’s own country or any other foreign country. The international funds are the funds that are available only in a foreign country.

    2. Regional Funds

    A regional fund is a fund that invests in securities across a specific geographical region like Europe, Asia, etc. Most  investors invest in such funds to diversify their investment portfolio for such regions about which they have thorough knowledge about.

    3. Country Funds

    As the name suggests, a country fund is a fund that invests in a particular country. For example, a country fund for say, the United States of America, will invest in stocks and securities present there. This enables the investors to narrow their risk and return expectations confined to a particular market, which becomes easier to study and analyze.

    4. Global Sector Funds

    A global sector fund invests in specific sectors in the overseas country. This helps investors who are interested in a particular sector to make investments and take advantage of the same.

    Features of International Mutual Funds

    Diversification

    Since international funds invest in equity/debt securities across the globe, it offers the investors a great opportunity to diversify their investment portfolio. This also enables investors to take advantage of the market conditions of the respective country.

    Risk

    Since the investment portfolio consists of securities of a foreign country, it becomes difficult to always keep a track of the social and economic conditions of that country. It is also difficult to obtain correct and technical knowledge about their market movements. This makes international funds more prone to risk.

    Management of money

    Since it is important to keep a track of the movements in the international markets, it becomes important to track the international markets on a real-time basis. Hence the investments are handled by the fund managers who are professionals having years of experience in handling such investments.

    Exposure

    International funds invest in equity/debt instruments of various countries which enable the funds to capitalize on the investment by taking advantage of the changing conditions of that particular country. This helps in ensuring a minimum loss across the investment portfolio.

    Advantages of Foreign Funds

    Geographic Diversification

    It is difficult for one country to top the charts consistently. Hence even if you don’t have a chance this year, there is one and it can be the next year. At a macroeconomic level, every country has its economic cycle. Through investment in different countries, you can experience lower ups and downs.

    Portfolio Diversification

    A portfolio has a combination of high, medium and low risk. If the home country is experiencing a low market, one can compensate it through the market abroad.

    Investment Financial Goal

    By diversifying your investment portfolio and leveraging the foreign currency, you can utilize your foreign exposure to meet your financial goals like higher education, retirement, etc. 

    Factors to consider before investing in Foreign Funds

    Being an investor who wants to benefit by investing in an International Mutual Fund, it is important to have a decent knowledge of the international financial market and research thoroughly before investing and till the time you are invested.

    Below are a few factors you can consider before investing in the Foreign Fund:

    1. Always research the mutual fund scheme w.r.t. Its credit risk, default risk, past performance, risk category, fund allocation to various sectors
    2. Read the offer documents carefully.
    3. The investment objective must match with your own financial objective from the fund. Example- If you have an objective of capital appreciation from an equity-oriented mutual fund in the long term, then you can consider such a fund that serves your investment objective like Franklin India Feeder – Franklin U.S. Opp. (G)
    4. Choose the country based on a few factors like stable and well-developed stock markets, strong legal system, strong corporate governance
    5. Select the country or stock market which is less risky, certain, better return and bonus like the United States. On the contrary, the Chinese market is considered riskier despite one-year higher returns.

    Frequently Asked Questions

    Are international mutual funds a good investment?

    International funds are treated at par with debt mutual funds from a taxation perspective. If the investors sell the units of the funds before a period of less than 3 years, investors will have to pay short-term capital gains tax as per the slab rate applicable to the investor.
    Where the fund is held for more than 3 years and sold after that, the investors will get the benefit of indexation and the gains will be taxed @20%.  The gains will be long-term capital gain.

    How are international mutual funds taxed? 

    Investment in international mutual funds are suitable for investors:
    1.who are looking into diversifying their portfolio across geographies and
    2.have decent knowledge about the movements in the international markets
    3.Understand its impact vis-a-vis their investment portfolio and are looking for keeping themselves invested in the long-run, say for at least 7 years or more.
    However, if the investors are new to the market, this should be avoided until the investors have a basic knowledge of the workings of the mutual fund.

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