What are the international funds?

International funds invest in securities outside of India. To that extent these funds generate performance of these schemes dependent on the movement of prices in securities, where the money is invested, plus the changes in exchange rate. Let us say money is invested in US market, then what happens in the US stock markets plus the rupee-dollar exchange rate, these two factors contribute to the scheme's performance.

Who should invest in these schemes? There are two types of investors who can consider these schemes. Investor number one who has got a sizeable portfolio investing in India. Let us take for example most of us have most of our investments in Indian market, whether it is fixed deposits, PPF, bonds, stocks or mutual funds, most of us have investments in India. Now if somebody wants a diversification beyond that then that is when international markets come into picture.

The other type of investor who can consider these investments in international funds is somebody who has got some goal to fund in future which is to be in some foreign currency. For example, there are lot of people these days who want to send their kids abroad for education, those fees have to be paid in those respective currencies and for such goals the funding can be done through investments made abroad. These kind of investors can consider investing in international funds.

Currently for Indian investors there are only equity funds available investing in international markets and to that extent one has to be careful about what kind of exposure one is taking.