Portfolio Investment Through Global Funds


The amount of mutual funds available for investing are beyond imagination. There is a plethora of mutual fund products available. In the same category, there is competition among fund houses and AMCs who try to sell their products through their investment objective. Mutual funds in the same category may carry a similar risk profile, but their investment strategy, asset allocation strategy may differ depending on the management handling that fund. Therefore, it is always better to do some background check about the fund before investing. Some mutual fund advisors also recommend comparing mutual funds that fall in the same category so that investors can determine which is a consistent performing fund.

Asset Management Companies owning mutual funds collect money from investors sharing common investment objective & invest this pool of funds across Indian & foreign economy. Depending on the nature of the scheme and its investment objective, a mutual fund may invest across various money market instruments and asset classes like equity and debt. It is always a better idea to diversify your portfolio with the right mix of equity and debt asset classes. However, to determine how much percentage you must allocate to different asset classes and securities, it is better to understand your risk appetite. A risk appetite helps an investor understand whether a particular investment scheme is feasible for his or her investment objective. It also helps them understand whether they can take the amount of risk the investment scheme is demanding.

What are global mutual funds?

Global mutual funds invest in invest in international markets. This allows investors to indirectly seek income from international markets through investments in an Indian mutual fund. There are some mutual funds who just like normal equity funds invest in international equities.  These global funds can also work as a hedge against market risk which Indian mutual funds hold. For this reason, investors can add some international diversification to their local mutual fund portfolio by investing in global funds. There is a common misconception among Indian investors that those who invest in global funds are charged an expense ratio that is twice as much as compared to Indian equity funds. However as per market regulator SEBI’s guidelines, an asset management company cannot charge a high expense ratio. For example, if SEBI has capped the expense ratio of global funds to 3 percent, a fund house cannot charge an expense ratio higher than 3 percent to global mutual fund investors.

Portfolio investment through global funds

You can start a Systematic Investment Plan (SIP) in global funds. SIP gives investors an opportunity to invest small amount at regular intervals instead of exposing your entire finances to the dangers of global equities.  If you want to build you mutual fund portfolio gradually, then SIP can probably be the best way to go about it. All you need to be is a KYC compliant individual in order to invest in global funds via SIP. Once you complete a one time mandate with your bank, every month on a fixed date, a predetermined amount is debited from your savings account and electronically transferred to global fund. If you wish to inculcate the discipline of regular investing, then you can start a SIP in global funds. If you are unsure how much you need to invest regularly in global funds to accumulate wealth over the long term, then you can refer to an online SIP calculator.

Investing in global mutual funds may offer investors capital appreciation over the long term, but investors should understand that these are equity funds that do not guarantee returns. Hence, it is better to consult a financial advisor before making an investment decision.