Managing investments successfully throughout the pandemic- Your guide

 From checking your mutual fund NAV in India to tracking investments made in equity mutual funds or debt funds, there are several aspects towards successfully managing your investments during a nationwide pandemic. The spread of the COVID-19 pandemic has led to a total lockdown throughout the country. All companies excepting entities in essential services have employees majorly working out of home while mutual fund firms are also functioning with minimal manpower at offices. The Association of Mutual Funds has also notified the Securities and Exchange Board of India (SEBI) sometime earlier that daily operations may be impacted at some levels. Yet, mutual fund houses are also striving to ensure seamless facilities for customers amidst these challenging times.

You can consider rebalancing your portfolio. Check out newer fund options including overseas mutual funds or international mutual funds if you wish to hedge against future expenses like global travel or higher education of children. Allocating a smaller portion of the portfolio towards international investments may help you enhance the quality of your portfolio while enabling you to benefit from positive market developments in fast-growing countries which have relatively shaken off the pandemic. However, consult financial advisors before making any such move as per experts. You can also try hybrid funds which may help in optimizing risks greatly. If you are investing in mutual funds via SIPs and do not wish to stretch a lot in the present situation, then you should know that everything will steadily get back on track in the near future.

People desirous of redemptions, new investments, switches or changes related to the account or profile, should keep a tab on the operational component of mutual funds. If digital platforms have been used, a majority of activities may be executed without any hindrances like before. However, people still conducting transactions physically may have to tackle a few temporary issues. Delays may be there in publishing the mutual fund NAV in India. Several fund houses have intimated investors with a view towards emailing transactions to them for processing as well. Many mutual fund houses have come out with mobile apps and internal digital platforms for investments and other online services.

You should look out for all such facilities offered by your mutual fund company. Investors may contact distributors for advice on proper digital platforms for meeting requirements of services and transactions. They may also initiate mutual fund transactions on investors’ behalf post approval of transactions via web-links through e-mails and SMS-es. The markets offer ample scope for investors to deploy funds in a suitably diversified portfolio of highly liquid, fundamentally solid and reputed entities.

Debt redemptions are comparatively more for fixed-income funds as per industry experts and managers. Year-end considerations may be stimulating these developments. You should also highlight liquidity above all else. Investors, if they have lower liquidity in their portfolios, should consider redeeming funds while building the necessary liquidity, irrespective of market circumstances. At the same time, if investors have ample cash in hand, they may consider fresh investment allocations while preparing to tackle some more volatility in the near future. You may consider sticking to your long-term investments unless your require funds urgently as per industry experts.

International Mutual Funds can provide good returns if strategically chosen

International mutual funds can pay off in terms of good returns in the long run, provided the investment strategy is right. Overseas mutual funds are the ones which make investments in foreign entities or companies. They are also called foreign investment mutual funds in some cases. These may come with higher exposure to risks although the chances of obtaining attractive returns may also be higher. Mostly, these are preferred as good long-term investment alternatives. 

Diversifying the portfolio is a must for hedging returns against market risks and taping into new opportunities for earning good returns. Investing in international mutual funds will not only enable greater portfolio diversification, but will also help in lowering losses and gaining higher returns since economic market cycles vary from one country to another. Hence, investments made simultaneously in different markets can pay off in the long run. 

What should you keep in mind while investing? 

Mutual funds investing overseas require you to be a careful and involved investor. They are not suitable for those who are mostly passive investors since there is an element of consistent and continual tracking of markets across the world. Those investing in international mutual funds should be absolutely certain about their investment objectives across both short and long durations beforehand. The track record of various global funds should also be carefully ascertained prior to investing.

Mutual fund foreign investments usually come with specific risks linked to fluctuations in rates of currency exchange. For example, if the fund is majorly investing in the USA market, then if there is a fall in the rupee value, then you will have higher rupees for every dollar you have invested in. Similarly, if the rupee value goes up, then there will be fewer rupees available for every dollar that you have invested in. In the latter scenario, the net asset value (NAV) will come down while in the earlier scenario, it will naturally go up. At the same time, you should also keep in mind that economic and socio-political changes and decisions in several global economies may impact performance of mutual fund investments. Hence, keeping a tab on market trends is a must for investors in international mutual funds.

Should you invest?

By tapping into multiple global economies, you may garner higher returns for the long haul while diversification of the portfolio also spreads out the risks considerably. However, you should make sure that you conduct thorough research on the funds you are interested in, their performance and the returns they are providing, before signing on the dotted line. Keep in mind taxation issues as well since hybrid funds majorly invest in companies in the domestic market and the remaining portions in global markets. As a result, returns garnered from the same are mostly subject to LTCG (long term capital gains) taxes.

However, international mutual funds have historically performed well over the years as per several reports. You should select plans across markets where the stock markets are properly developed and zero in on those markets which have suitable corporate governance. Invest in countries which have solid legal systems and solid, long-term businesses.