❝International mutual fund can be more risky than normal mutual fund❞
Harshad Chetanwala, Head - Customer Delight, Quantum AMC Pvt. Ltd.
What are international mutual funds and what is the difference between normal and international mutual funds?
In international mutual funds, the fund manager invests in companies outside India, whereas in a normal mutual fund, the investment will be done in Indian companies listed in India.
Are international mutual funds riskier than normal mutual funds?
A good mutual fund manager will always try to reduce the risk, however, in the case of international mutual funds, there is additional risk of currency fluctuation, economic and regulatory environment. Hence, they can be more risky than a normal mutual fund.
In your opinion, what would be an ideal time horizon for investing in international mutual funds?
Any investment in equities, domestic or international, need to have a long-term horizon of more than 5-7 years.
Should one look at international mutual funds for diversification purpose or do these funds have potential to outperform the normal mutual funds?
There is a lot of potential in India and Indian companies at present and this potential would continue for a decade or more. Hence, investors are better off investing in normal mutual funds by investing in Indian companies. Some HNI Investors with higher risk appetite may like to look at these kinds of funds from a diversification perspective.