Dalal Street Investment Journal - - SPECIAL REPORT -

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.

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