7 Questions to Ask Yourself Before Investing Globally

Mutual funds are supposed to carry a diversified portfolio and offer active risk management. Market regulator SEBI has further categorized mutual funds for investors to be able to distinguish between various schemes and make an informed investment decision. If you carry a high risk appetite and are keen on seeking capital appreciation through investments in equity and international equity markets you can do so by investing in global funds. However, here are a few things few questions that one should ask themselves before investing l globally

1. What is your financial goal?

This is the most important question which every investor should ask himself or herself before investing in mutual funds. Before you buy any mutual fund scheme, investors should always ask themselves, “What is my investment objective? What is my risk appetite?” If you have long term financial goals, investing in global equity funds may seem like a feasible choice. But at the same time you need to also ask yourself if your risk appetite allows you to invest in volatile markets which may or may not perform as you for your expectations.

2. Do I have an emergency fund as a backup?

Investing in global equities can attract higher volatility to your overall mutual fund portfolio. This is the reason why investors should build an emergency fund so that in case the market doesn't work in their favour they have a backup plan to further support the Global equity Investments.

3. Do I have a long term investment horizon?

Historically, investments made in equity funds have offered a capital appreciation to those investors who have held onto their investments for a minimum period of 7 to 10 years. Do you have it in you to remain committed to your investments for such a tenure? Or do you need the money in a short span of time? Depending on your income needs investors as per their financial plan, should determine whether they can have a long term investment horizon before investing in global equity funds.

4. Is the fund diversified?

Just like prioritizing your financial goals is essential when making an investment decision one should also make sure that the international equity fund that they are about to invest and carries a diversified investment portfolio. The fund's portfolio must include the right mix of asset classes so that it aligns with your investment objective. Diversification also helps in balancing the overall risk of a mutual fund portfolio. It is less likely for all the markets to perform in tandem at the same time. Hence it is essential that one should invest in an equity fund that is adequately diversified.

5. What is the expense ratio of the fund?

Yes it is true that investing in global funds one gets an opportunity to seek capital appreciation through investments in markets across the globe. However one should also take into consideration the expenses ratio of that particular fund before investing. An international Equity Fund with a high expense ratio can affect your long-term capital appreciation. Expense ratio is calculated by dividing the mutual funds expenses by its asset under management (AUM). It is essential for investors to take the fund's performance into consideration and make sure that the expense ratio levied by the fund justifies this performance.

6. Is the fund owned by a credible Asset Management Company?

By now you may have made a list of a few funds out of which you plan on investing in order to add an international touch clear already existing mutual fund portfolio. Before making the final decision it is equally essential for you to make sure that the mutual fund you are investing in is owned by a reputed fund house or an asset management company. Mutual funds are managed by experienced fund managers who implement an investment strategy to help the scheme beat its underlying index and give investors an opportunity of generating decent capital appreciation. The duty of the fund manager to buy and sell securities in accordance with the fund’s investment objective. Hence, it is necessary for investors to choose a global fund that is under professional management.

7. Do you possess enough knowledge about international equity markets?

You may have some idea about how the equity market functions in India. Because every economy works and functions in different circles. Just because the equity funds are performing well here in India, this is done does not necessarily mean that equity markets across the globe are doing well. Investors need to have a fair idea about how the global equities function if they want to invest their hard and money in international markets.

Investing in global markets may seem like a lucrative choice however the fact remains that investment in mutual funds do not guarantee returns. It is better to consult a financial advisor before taking the final call of investing in Axis Global Equity Alpha Fund of Fund.

Axis Global Equity Alpha Fund of Fund

An open ended fund of fund scheme investing in Schroder International Selection Fund Global Equity Alpha

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.