PROS OF INVESTING IN INTERNATIONAL FUNDS:
1. Diversification: “In my 45-year career as an investment counsellor, humility did show me the need for worldwide diversification to reduce risk. That career did help me to become more and more humble because statistics showed that when I advised a client to buy one stock to replace another, about one-third of the time the client would have done better to ignore my advice. In other endeavours, humility about how little I know has encouraged me to listen more carefully and more wisely,“said Sir John Templeton, the iconic investor, fund manager and philanthropist. In finance and investment planning, diversification is the risk management strategy of combining wide variety of investments to reduce the overall risk of an investment portfolio. Not all the markets of the world move in tandem, so a downtrend in a home market can be well taken care of by gains in the other international markets.
2. Lets you capitalize on some of world’s best
opportunities: Many international companies that are fundamentally strong and are global leaders in the services or products they offer like Amazon, Google, Facebook, Microsoft, etc. do not have their stocks listed on the Indian stock exchanges. In such cases, if any investor wants to participate in the growth stories of these stocks, he/she can do so by investing in international mutual funds.
3. Acts as hedge: An international fund acts as a hedge against the fall in the rupee against dollar, thus minimising loss owing to the currency depreciation.
4. Sufficient track records: Majority of the international mutual fund schemes have commendable reputation and provide adequate data on their past performance. All of this information empowers the investors to take a sound and informed decision.
5. Availability of wide variety of schemes: An investor has wide variety of schemes at his/her disposal. The investor can choose region-specific schemes or schemes based on particular theme.