'Desi' mutual funds give way to 'phoren maal'

When MacDonald's first came to India, people flocked to it in droves. And they still do. 

Now, we have Tag Huer, Gucci, and many other top international brands making a foray into India. Indian shoppers are having a field day!

The latest entry in the list of global products are mutual funds. 

At least 10 mutual fund houses have, in the last one year, launched international or global funds, which basically invest in the overseas equity markets. 

The big question: should you invest in them?

Ajay Bagga, CEO of Lotus AMC says, “Today, about 96 per cent of Indians still invest in debt instruments like bank deposits and provident funds." He recommends,"Before getting into international mutual funds, you should make an entry into the Indian equity."

A large number of people still invest in fixed instruments. But if you are among the 4 per cent who have already optimised on Indian equities, international funds could be your next progressive step. 

The bottom-line: understand the International equity market as well as the international markets. 

The pros

·         These funds aim at diversifying your country risk (is that risk, which is particular to a specific country) as well as giving you the benefits of other economies. For instance, a looming threat of an early election may affect the Indian equity market and it is a risk associated with India only.

·         International markets will stay unaffected with the Indian political fallouts. So, an investor can take the advantage of the international market situation.

·         These investments fall outside the purview of the limit of USD 200,000 that the government allows Indians for foreign investments. So, you can make investments in the global markets without exhausting your limit.

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