Indian investors are waking up to the sheer
potential of international mutual funds in recent times. Several investment
advisors and managers of funds are gung-ho about these global funds while
private wealth consultants/managers are also recommending various products to
their wide spectrum of clients. Geographical diversification is becoming really
essential for portfolios of investors in India. Are these funds suitable for
Indian investors who individually invest smaller amounts on a regular basis
through SIPs?
The answer is yes, provided financial goals and risk appetite are in sync.
The best
international mutual funds give investors in India a chance to diversify their
portfolio and give it exposure to stocks abroad. These are international equity
funds spanning countries like
the USA, China, Europe, Brazil and other emerging worldwide markets while there
are schemes focusing on specific sectors including mining, agriculture,
information technology and so on. Some of these fund plans have passive
strategies for investments similar to index investments. There are several
reasons behind the soaring popularity of global mutual funds including the
considerable stimulus package declared by the USA Government which has got
people in India eyeing opportunities for diversifying their portfolio in the
American market. Additionally, several investment advisors believe that leading
USA companies including Amazon, Facebook, Alphabet (Google parent) and Netflix,
among others, may uniquely lead global disruptions in a post-COVID-19 scenario.
There are similar factors prompting investments in other nations as well.
Global
equity opportunities fund India- Should you invest?
Amongst the international
equity funds India which are
popular with investors, the global
equity opportunities fund in India is an emerging
favorite. Schemes like these have performed exceedingly well over the last 3
years or so, if such a duration is taken into account and those who had
invested approximately Rs. 1 lakh three years earlier in these funds would have
seen their corpus swell to a whopping Rs. 2.15 lakh today! This is a specific
fund which majorly deploys investments in buying foreign company shares. If you
invest for at least 5 years or higher, you can expect handsome returns that
will comfortably surpass returns from fixed income instruments and inflation
alike.
However, market fluctuations may lead to
fluctuations in investment value down the line as well. Global equity
opportunities funds are suitable for investing a portion of your capital for
diversifying your portfolio. This means that if there is a correction in the
Indian market, you can at least safeguard a part of your portfolio from the
same. However, you should invest in a fund which invests in companies of
varying sectors, sizes and nations. Have an investment horizon of at least 5
years without wanting to redeem your money before this duration.
Taxation
on global equity opportunities fund India
When it comes to a global equity opportunities fund,
you should remember that capital gains will incur 20% taxation if you sell
mutual funds post 3 years from the investment date. If sold before 3 years,
they will be taxed at the prevailing slab after adding your income to the
amount. Taxes do not have to be paid if you are holding onto these units. Dividends
will be added to your income and undergo taxation based on your tax slab.
If your income from dividends crosses Rs. 5,000 in a
particular financial year, then TDS will be deducted by the mutual fund house
at the rate of 10%. A global equity opportunities fund could be a great way to
diversify your portfolio and spread out your risks while enhancing the overall
quality of your portfolio.
