Invest in Global Markets Through Global Equity Funds

Global investments offer the opportunity to invest in larger or fast-growing economies and even specific stocks or sectoral opportunities that are not present in India. Further, they help diversify portfolio risk at the country- and currency-level. Expanding your portfolio to global investments also ensures better risk-adjusted returns.

However, despite its many advantages, a majority of Indian investors shy away from investing globally. Global investing is not as complicated as it seems and can help you achieve a well-diversified portfolio.

Options to Invest Globally

There are four ways in which Indians can invest in global markets: Direct Investments, ETFs, Global Mutual Funds, and Fund of Funds.

Direct Investments:

Investors need to open a separate trading and demat account with an international company or maintain an international broking account with an Indian company for direct investments.

Global Mutual Funds:

One category of funds that has gained popularity in recent years is global mutual funds or international funds. While global mutual funds and international funds are often used interchangeably, there is a slight difference between the two. International funds invest in countries other than the domestic market, while global mutual funds invest in all the countries across the globe (including the domestic market). These funds offer the advantage of being able to access global companies through domestic fund houses and also the expertise of leading fund managers across the globe.

Fund of Funds:

FoF or fund of funds is similar to a mutual fund, but instead of investing in debt and equities directly, it invests in other mutual funds schemes. The investment may be made in a different fund within the same fund house or a different fund house. 

In case of an international FoF, investments are made in a mutual fund managed by an international fund house that invests in shares and bonds of global companies. The fund manager selects a FoF which aligns with the risk profile and investment philosophy of the Scheme.

FoF offers two distinct advantages. First, the fund managers of this FoF invest in funds across various asset classes, based on the FoF’s investment strategy. This acts as a diversification tool, balancing both risk and reward. Second, FoFs are managed by experienced portfolio managers who conduct due diligence on mutual fund schemes before investing in them.

From the options above, investing internationally via mutual funds and FoF seems like the most convenient routes to access global opportunities. One can invest in these funds without the need to open a separate overseas trading account. Small investors can also access these funds.

Allocating a small percentage of your portfolio to global mutual funds can be a wise strategy to reduce volatility, manage risk, and truly diversify your portfolio .

Disclaimer: This article represents the views of Axis Asset Management Co. Ltd. and must not be taken as the basis for an investment decision. Neither Axis Mutual Fund, Axis Mutual Fund Trustee Limited nor Axis Asset Management Company Limited, its Directors or associates shall be liable for any damages including lost revenue or lost profits that may arise from the use of the information contained herein. Investors are requested to consult their financial, tax and other advisors before taking any investment decision(s). Statutory Details: Axis Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, sponsored by Axis Bank Ltd. (liability restricted to Rs. 1 Lakh). Trustee: Axis Mutual Fund Trustee Ltd. Investment Manager: Axis Asset Management Co. Ltd. (the AMC). Risk Factors: Axis Bank Limited is not liable or responsible for any loss or shortfall resulting from the operation of the scheme. No representation or warranty is made as to the accuracy, completeness or fairness of the information and opinions contained herein. The AMC reserves the right to make modifications and alterations to this statement as may be required from time to time.

Past performance may or may not be sustained in the future.

Note - Investors will be bearing the recurring expenses of the Scheme in addition to the expenses of the scheme in which Fund of Funds scheme makes investment.

Stock(s) / Sector (s) / Issuer(s) mentioned above are for illustration purpose and should not be construed as recommendation

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