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Last Updated : Jul 03, 2019 07:51 PM IST | Source: Moneycontrol.com

Here's how international funds have fared against equity schemes

Top five best performing international fund included Franklin Asian Equity Fund (8.41 percent) and HSBC Asia Pacific (Ex Japan) Dividend Yield Fund (7.74 percent).

Himadri Buch @himadribuch

International mutual funds schemes have delivered the highest average return of 6.11 percent in June across all categories, according to the data on Value Research, a mutual fund research firm.

The domestic mutual fund schemes that invest in overseas markets are termed as international schemes.

Among schemes that registered the best returns in the international category were Kotak World Gold Fund and DSP World Gold Fund that delivered 15.31 percent and 13.15 percent average returns respectively. Edelweiss Greater China Equity Off-shore Fund stood third  with 10.99 percent average return in one month.

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Rise in gold prices globally has helped gold funds deliver positive returns. Gold leaped almost 8 percent in June to rise above $1,400 an ounce for the first time since 2013.

Top five best performing international funds also included Franklin Asian Equity Fund (8.41 percent) and HSBC Asia Pacific (Ex Japan) Dividend Yield Fund (7.74 percent).

Mutual fund experts attributed the outperformance of international funds to the strong Asian market. Apart from that, they also said that rupee depreciation against the dollar had played a major role in positive returns of these funds.

The decline in the value of the rupee against the dollar in recent weeks has benefitted international funds.

In June, rupee steadily weakened to touch a low of 69.850 against the dollar on June 17. However, it managed to end in green, gaining 32 paise or 0.46 percent to close at 68.94.

When an investor invests in an international fund, the money is invested in that particular overseas market in dollar-denominated assets.

The change in the price of these assets (foreign equities or bonds) during the period of your investment mainly drives the return of the fund.

But, apart from the performance of the underlying portfolio itself, the movement in the dollar-rupee exchange rate also contributes to the fund’s return.

Financial planners typically advise investors to invest about 10 percent in international funds.

These are mutual fund (MF) schemes launched by fund houses in India which solicit your money here and then invest it abroad.

Advisers are suggesting investment in international funds as a means to diversify across countries and currencies due to volatility in Indian equities.

In June, among equity funds, the worst performing category was small-cap schemes which delivered negative 2.55 average return. In comparison, BSE Small Cap Index plunged 3.7 percent during the review period.

Barring technology dedicated schemes, all sectoral funds gave negative returns.
First Published on Jul 3, 2019 02:38 pm
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