How do MNC mutual funds work?

MNC funds primarily invest in multinational corporations that get their major revenue from domestic and international operations. These corporations generally boast of good corporate governance, strong parentage and superior cashflows, which leads to higher valuations.

Indian MNC funds mostly invest in Indian companies with foreign promoters. Notably, SBI Magnum Global Fund has the highest overseas equity component at 10 percent.

Data from Ace MF shows that on a one-year and three-year basis, MNC funds have delivered 3.4 percent and 18.8 percent returns, which are even less that their benchmarks Nifty MNC. Returns have been tepid due to the presence of competitive Indian companies with good investment opportunities.