Last Updated on September 20, 2021 by Shiv Nath Hari
International Mutual Fund: Do you intend to invest money in International Mutual Fund? Consider these 4 things before investing
International Mutual Fund: Before investing in an international fund, it is important to understand the risks associated with them and the things that affect the returns.
International Mutual Fund: A basic fund of investment is to invest your capital in more than one option. Now investors have investment options even outside the country and its attractiveness is increasing rapidly. One can invest in foreign companies through International Mutual Funds. The biggest advantage of investing in this is about diversification. If you are investing only in Indian stocks, the performance of the Indian market can have an impact on the returns, but if you invest in international funds, you can take advantage of the growing economy of another country. However, it is very important to consider some things before investing in it, such as what is the risk about the investment and what affects the return from it.
What is the fund of Fund of Funds, which investors should invest in FOF, what is its profit and loss
Consider these things before investing
- Risk: There are many risks involved in investing abroad, in which currency risk is very important. Like if you invest in American companies through this fund and if the rupee depreciates against the dollar then the NAV (Net Asset Value) will increase and conversely if the rupee strengthens then there will be a slippage in the NAV.
- Macroeconomic factors: The performance of the fund in which you have invested depends on the political, economic or social situation of that country. In such a situation, before investing, keep a full eye on the situation in the companies of the country in which the fund’s money will be invested.
- Benefits of many economies: Through international funds, the benefit of investing in many growing economies is available. This helps in diversifying your portfolio in a better way.
- Taxes: Generally, the money of International Mutual Funds is mainly invested in equity or equity related instruments of foreign companies. However, due to non-investment in domestic equities, they are not considered equity funds. In such a situation, it is treated as a debt fund from the tax point of view and the way debt funds are taxed on LTCG and STCG, it will be applicable here as well. Debt funds holding less than 36 months attract STCG and are taxed at the slab rate, while holdings above 36 months attract LTCG and are taxed at the rate of 20 per cent with indexation.
If you are going to invest in mutual funds for the first time, then do not make these mistakes even by mistake, otherwise money will be lost.
Types of International Funds
- Global Funds: International Funds and Global Funds may sound similar in name but there is a lot of difference between the two. Many of the capital invested in Global Funds are invested in companies all over the world, even in the country where the investor is , even in companies of that country. In contrast, the money of the International Fund is invested in other countries of the world except the country of the investor.
- Regional Fund: The money of this fund is invested in companies of countries located in a particular part of the world.
- National Fund: The money of this fund is invested in the company of only one country. With this, investors get the benefit of the growing economy by investing in companies existing in the same country.
- Global Sector Funds: The money of this fund is invested in companies around the world present in a particular sector.
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