Home Collections International Mutual Funds: Meaning, Types & List of Top International Funds in 2024
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Investors who want to invest outside of the Indian market can invest in international mutual funds. These foreign mutual funds represent a dynamic and increasingly popular investment avenue in today’s interconnected global economy. Many investors look to expand beyond their home countries and invest internationally in equity investments. International Mutual Funds provide an effective way to achieve this global diversification. Therefore, in this blog, we will explore the meaning, types, advantages, features, and more of international mutual funds. Let’s begin.
Best International Mutual Funds in India for 2024
Here is a list of the best international funds in India based on their one-year returns:
| Fund Name | AUM (in Cr) | Expense Ratio (%) | 1Y Return | Exit Load |
|---|---|---|---|---|
| Franklin India Feeder - Franklin U.S. Opportunities Fund | ₹3,385 | 0.57% | 37.77% | 1.00% |
| Motilal Oswal Nasdaq 100 FOF | ₹4,625 | 0.24% | 35.12% | 0.00% |
| Aditya Birla SL Global Excellence Equity FoF | ₹180 | 0.68% | 31.31% | 0.25% |
| Aditya Birla SL Global Emerging Opp Fund | ₹259 | 0.57% | 24.69% | 0.25% |
| DSP US Flexible Equity Fund | ₹882 | 1.51% | 22.21% | 0.00% |
| Invesco India - Invesco Global Equity Income FoF | ₹21 | 0.86% | 21.24% | 1.00% |
| Edelweiss Europe Dynamic Equity Off-shore Fund | ₹84 | 1.47% | 16.91% | 1.00% |
| Edelweiss US Value Equity Offshore Fund | ₹101 | 1.45% | 16.29% | 1.00% |
| DSP Global Allocation FoF | ₹62 | 1.41% | 14.36% | 0.00% |
| ICICI Pru US Bluechip Equity Fund | ₹3,056 | 1.10% | 11.48% | 1.00% |
Disclaimer: Please note that the above list is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing.
Note: The data on the list is from 21st June, 2024. This data is derived from the Tickertape Mutual Funds Screener.
🚀 Pro Tip: You can use Tickertape’s Mutual Fund Screener to research and evaluate funds with over 50+ pre-loaded filters and parameters.
Top 10 International Mutual Funds in India: An Overview
Here is a brief overview of the international mutual funds listed above:
Franklin India Feeder – Franklin U.S. Opportunities Fund
Franklin India Feeder Franklin US Opportunities Fund is an equity mutual fund from Franklin Templeton Mutual Fund. With a Assets Under Management (AUM) of ₹3,427 cr. and an Net Asset Value (NAV) of ₹75.37, this fund has shown a 37.77% return over the past year. The minimum SIP investment for this fund is ₹500. The fund’s three-year CAGR is 7.33%, and the expense ratio is 0.57%.
Motilal Oswal Nasdaq 100 FOF
Motilal Oswal Nasdaq 100 FOF is an equity mutual fund from Motilal Oswal Mutual Fund. Managed by Swapnil P. Mayekar and Rakesh Shetty, the fund has an AUM of ₹4,625 cr. and a NAV of ₹34.81. Over the past year, the fund has returned 35.12%. The minimum SIP investment is ₹500. The fund’s three year CAGR is 16.16% and expense ratio is 0.24%.
Aditya Birla SL Global Excellence Equity FoF
Aditya Birla Sun Life Global Excellence Equity FoF is an equity mutual fund managed by Dhaval Joshi at Aditya Birla Sun Life Mutual Fund. The fund has an AUM of ₹180 cr. and a latest NAV of ₹33.51. Over the past year, it has delivered a return of 31.31%. Investors can start a SIP with a minimum amount of ₹100. The fund’s three year CAGR is 12.98% and the expense ratio is 0.68%.
Aditya Birla SL Global Emerging Opp Fund
Aditya Birla Sun Life Global Emerging Opportunities Fund is an equity mutual fund managed by Dhaval Joshi at Aditya Birla Sun Life Mutual Fund. It has an asset size of ₹259 cr. and a current NAV of ₹25.41. Over the past year, the fund has delivered a return of 24.69%. Investors can start a SIP in this fund with a minimum investment of ₹100. The fund’s three year CAGR is 7.27% and the expense ratio is 0.57%.
DSP US Flexible Equity Fund
DSP US Flexible Equity Fund is an equity mutual fund offered by DSP Mutual Fund. Managed by Kedar Karnik and Laukik Bagwe, the fund hasAUM totaling ₹882 cr. The most recent NAV) is ₹58.87. Over the past year, the fund has delivered a return of 22.21%. Investors can start a Systematic Investment Plan (SIP) in this scheme with a minimum amount of ₹100. The fund’s three year CAGR is 11.93% and the expense ratio is 1.51%.
Invesco India – Invesco Global Equity Income FoF
Invesco India – Invesco Global Equity Income FoF is an equity mutual fund managed by Amit Nigam at Invesco Mutual Fund. The fund has an AUM of ₹21 cr., and its latest NAV is ₹27.12. Over the past year, it has delivered a return of 22.80%. Investors can start a SIP in this scheme with a minimum amount of ₹500. The fund’s three year CAGR is 13.38% and the expense ratio is 0.86%.
Edelweiss Europe Dynamic Equity Off-shore Fund
Edelweiss Europe Dynamic Equity Offshore Fund, an equity mutual fund from Edelweiss Mutual Fund, is managed by Bharat Lahoti and Bhavesh Jain. The fund has an asset under management (AUM of ₹84 cr., with a current NAV of ₹20.88. Over the past year, the fund has returned 16.91%. The fund’s three year CAGR is 8.13%, the exit load is 1% and the expense ratio is 1.47%.
Edelweiss US Value Equity Offshore Fund
Edelweiss US Value Equity Offshore Fund is an equity mutual fund managed by Bharat Lahoti and Bhavesh Jain from Edelweiss Mutual Fund. With an AUM of ₹101 cr. and a current NAV of ₹31.83, this fund achieved a 16.29% return over the past year. The minimum amount required to start an SIP in this fund is ₹100. The fund’s three year CAGR is 10.22% and the expense ratio is 1.45%.
DSP Global Allocation FoF
DSP Global Allocation FoF is an equity mutual fund from DSP Mutual Fund. Managed by Kedar Karnik and Laukik Bagwe, the fund has an AUM of ₹62 cr. and a recent NAV of ₹20.64. Over the last year, the fund has given one year returns of 14.36%. Investors can start a SIP in this fund with a minimum amount of ₹100. The fund’s three year CAGR is 4.94% and the expense ratio is 1.41%.
ICICI Pru US Bluechip Equity Fund
ICICI Prudential US Bluechip Equity Fund is an equity mutual fund managed by Rohan Maru and Sharmila D’mello under ICICI Prudential Mutual Fund. It has an AUM of ₹3,056 cr. and a recent NAV of ₹63.65. Over the past year, the fund has returned 11.48%. The minimum SIP investment is ₹100. The fund’s three year CAGR is 9.38% and the expense ratio is 1.10%.
How to Invest in the Best International Mutual Funds in India?
Investing in international mutual funds can be a straightforward process. Here’s a guide to get you started:
- Open a demat/trading/brokerage account.
- Register online at any AMC website.
- Explore different international or foreign funds to figure out which one suits your investment objectives.
- Investors can use tools like the Tickertape Mutual Fund Screener to sort through these funds and explore their fundamentals and performance in the past.
- Proceed to invest by clicking on the appropriate option and specifying the amount and investment mode (SIP or Lumpsum).
- Submit your KYC details, including your PAN number and bank details, to finalise your investment.
Note: It is important to conduct thorough research and consult a financial advisor before investing in anything.
What are International Mutual Funds?
International mutual funds are mutual funds investing in foreign stocks. These investment vehicles pool investors’ money to collectively invest in a diversified portfolio of securities based outside of India. These overseas funds work in the same way as any other equity mutual fund. They expose investors to a broad spectrum of global financial markets, including stocks, bonds, and other securities. Unlike domestic mutual funds that focus solely on assets within a specific country, international mutual funds aim to capture opportunities and manage risks on a global scale. Investing in global markets that are likely to grow over a long time makes them effective for the future.
How Do Foreign Funds in India Work?
Investing in the best international mutual fund in India is like investing in regular equity mutual funds. You can invest in them in INR, and in return, you get units of the funds. The fund manager takes this money and invests it in stocks of companies listed outside India. Now, you can easily invest in international mutual funds by investing in an existing global fund that already has a pre-designed portfolio. Just like all mutual funds, they follow regulations set by the Securities Exchange Board of India (SEBI).
Types of International Funds
The types of international funds are as follows:
- Global Funds: Although their names may sound interchangeable, it’s essential to differentiate between international funds and global funds. Global Funds invest in securities worldwide, including the investor’s home country. Conversely, International Funds invest in securities globally, excluding the investor’s home country.
- Regional Funds: As implied by their name, regional funds concentrate on companies within a specific geographical area anywhere globally.
- Country Funds: Country Funds exclusively invest in securities from a single foreign country, exposing investors to that country’s economy. However, investing in these funds requires thorough research.
- Global Sector Funds: Global Sector Funds target companies within a particular sector across various countries worldwide. These funds prioritise gaining exposure to specific sectors.
Features of Overseas Mutual Funds
Overseas mutual funds, also known as international or global mutual funds in India, come with several distinctive features:
- Global Diversification: Overseas mutual funds provide investors with the opportunity to diversify their portfolios across different countries and regions. This diversification may help spread risk and reduce the impact of economic downturns in a specific country.
- Asset Variety: These funds invest in a range of assets such as international stocks, bonds, and other securities. The portfolio may include a mix of developed and emerging market assets, offering investors exposure to various global economic conditions.
- Currency Exposure: Investing in overseas mutual funds exposes investors to currency fluctuations. Since the best global mutual funds in India deal with assets denominated in foreign currencies, exchange rate changes can impact investors’ overall returns.
- Professional Management: Fund managers with expertise in international markets make investment decisions on behalf of investors. Their goal is navigating and investing in global market trends, identifying growth opportunities, and managing risks associated with different regions and industries.
- Liquidity and Redemption: The best foreign mutual funds in India typically offer liquidity to investors, allowing them to buy or sell units based on the prevailing Net Asset Value (NAV). Investors can redeem their units and receive the corresponding value, subject to applicable exit loads.
Benefits of Investing in Foreign Mutual Funds
Despite these risks, international equity funds can offer several potential benefits, including:
- Diversification: Investing in international index funds in India can help to diversify your portfolio and reduce overall risk.
- Growth Potential: International markets can offer exposure to different industries and economies, providing opportunities for higher growth in global mutual funds in India.
- Hedging Against Inflation: A mutual fund investing in foreign stocks can help hedge against inflation. This is because the best international mutual funds in India may tend to outperform domestic stocks during periods of high inflation.
What are the Returns on International Mutual Funds & How are they Calculated?
The growth of the top international funds in India has been impressive in recent years. According to the Investment Company Institute (ICI), assets in international mutual funds and ETFs have grown from $2.3 trillion in 2010 to $4.2 trillion in 2023. This represents a Compound Annual Growth Rate (CAGR) of 7.4%.
Furthermore, due to the increasing globalisation of the economy, the returns on international funds have been gaining a lot of attention lately. On average, international funds have yielded annual returns of 10.17% over the past five years. The annualised returns for the 3-year and 10-year periods stand at 6.91% and 7.57%, respectively. Therefore, out of 68 international schemes in the market, 30 schemes offered double-digit returns in this year to date.
Additionally, the returns on international mutual funds India can be calculated in a number of ways. The most common method is to use the Net Asset Value (NAV).
To calculate the return on an international mutual fund, you can use the following formula:
Return = (NAV1 – NAV0) / NAV0
where:
- NAV1 is the NAV of the fund at the end of the period
- NAV0 is the NAV of the fund at the beginning of the period
This formula will give you the total return of the fund, which includes both capital appreciation and income distributions.
How to Choose the Best International Mutual Funds for Investing?
Choosing good international mutual funds for investing may require careful consideration of various factors and thorough research. Here’s a step-by-step guide to can help you make informed decisions:
- Define Your Investment Goals and Risk Tolerance: Investors can clearly define their investment objectives before diving into specific funds, whether long-term growth, income generation, or a combination. They can assess their risk tolerance, considering their ability to withstand potential market fluctuations.
- Understand Fund Categories and Investment Strategies: International mutual funds can be categorised. It can be based on investment focus, such as the best global funds in India (investing worldwide), regional funds (focusing on specific regions like Europe or Asia), or country-specific funds. Identify funds that align with your investment goals and risk tolerance.
- Evaluate Fund Performance: Investors can analyse the historical performance of potential funds, including their track record of returns, volatility, and risk-adjusted returns. They can consider metrics like the Sharpe and Sortino ratios to assess their performance relative to market benchmarks and peers.
- Assess Fund Expenses: Mutual funds charge expense ratios covering operating costs and management fees. Lower expense ratios indicate more of your investment goes towards potential returns. Investors can prioritise funds with competitive expense ratios.
- Consider Fund Management and Track Record: Investors can research the fund’s management team, their experience, and investment philosophy. They can assess their track record of managing similar funds and their ability to navigate market cycles.
Who Should Invest in International Mutual Funds?
- Interested in Global Brands: If you’re interested in owning shares of global market leaders like Netflix, you can do so through international funds since these companies aren’t listed on Indian stock exchanges. Investing in international funds may allow you to be part of the profits these well-known brands generate.
- Exploring Opportunities in Different Markets: Markets can perform differently at various times. While Indian markets may be doing well, others like the US markets might be thriving. By investing in international funds, you can take advantage of opportunities in other markets.
- Long-Term Goals and International Funds: If you’re a long-term investor aiming to build a significant corpus for goals like retirement or your child’s education, international funds can be a helpful tool.
Risks Involved While Investing in International Equities Funds
Investing in international equities funds may carry several risks, including:
- Currency: The value of your investment can fluctuate based on changes in exchange rates. For example, if you invest in a fund that holds stocks denominated in euros, and the euro weakens against the US dollar, the value of your investment will decrease.
- Country: Political and economic instability in a country can lead to losses for investors. For example, if a country experiences a civil war or a financial crisis, the value of stocks in that country could plummet.
- Liquidity: Some international markets are less liquid than the US market. This means it can be more difficult to buy and sell securities. This can lead to wider bid-ask spreads and higher transaction costs.
- Company-Specific: Just like domestic stocks, the international shares can also be subjected to company-specific risks. These risks can include poor management, product recalls, or legal troubles.
Taxation of International Funds as per the Union Budget of 2024-25
Finance Minister Nirmala Sitharaman announced a reduction in the holding period for equity Funds of Funds (FoFs), overseas FoFs, and gold mutual funds. Let us learn about these changes in detail:
Short-Term Capital Gains (STCG)
The gains from international mutual funds with holding periods under 24 months are classified as short-term capital gains. The previous holding period for STCG was under 36 months. These gains are taxed according to your income tax slab..
Long-Term Capital Gains (LTCG)
The gains from international mutual funds exceeding holding periods of 24 months are now classified as long-term capital gains. Here are a few changes made to the LTCG tax rate and holding period for international mutual funds:
- Holding Period: The holding period for LTCG on international mutual funds was reduced from over 36 months to over 24 months.
- Tax Rate: The long-term capital gains (LTCG) tax rate was reduced to 12.5%, previously taxed at 20%.
Prior to this change, investments in international funds held for less than three years were taxed as short-term gains at the investor’s income tax slab rate, and those held longer were taxed at 20% as long-term gains. With the new rule, investments held for over 24 months will now benefit from the reduced LTCG rate of 12.5%, while those held for less than 24 months will still be taxed as short-term gains at the slab rate.
| Capital Gains Tax | Old Holding Period | New Holding Period | Old Tax Rate | New Tax Rate |
| Short-Term Capital Gains (STCG) | Under 36 months | Under 24 months | Taxed according to your income tax slab. | Taxed according to your income tax slab. |
| Long-Term Capital Gains (LTCG) | Over 36 months | Over 24 months | 20% | 12.5% |
Factors to Consider Before Investing in International Mutual Funds
Here are some key factors to consider before investing in international mutual funds:
- Geographic Diversification: Investors can evaluate the specific regions or countries the fund invests in and assess whether they align with your diversification goals.
- Expense Ratio: Interested investors can consider the fund’s expense ratio, which represents the annual fees charged to manage the fund. Lower expense ratios can positively impact your overall returns.
- Tax Regulation: International investments may be subjected to different tax rules than domestic investments. Investors can consult with a tax advisor to understand the tax implications of investing in international mutual funds.
To Wrap It Up…
International mutual funds offer investors a gateway to the global marketplace, providing a means to diversify their portfolios and potentially benefit from the growth opportunities available worldwide. As financial markets evolve and become more interconnected, international mutual funds’ role may be likely to remain significant. As always, please do your own research and/or consult a financial advisor before investing.
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Frequently Asked Questions About International Mutual Funds
1. What are the top 5 global mutual funds in India?
The top 5 global mutual fund in India are as follows:
(a) Franklin India Feeder – Franklin U.S. Opportunities Fund
(b) Motilal Oswal Nasdaq 100 FOF
(c) Aditya Birla SL Global Excellence Equity FoF
(d) Aditya Birla SL Global Emerging Opp Fund
(e) DSP US Flexible Equity Fund
Note: The data on the list has been taken on 21st June 2024.
2. How long should I stay invested in international mutual funds?
International mutual funds are usually equity funds. Consequently, experts may recommend a long-term investment horizon of at least 5-7 years.
3. Where do the top rated international mutual funds invest?
International mutual funds invest in companies and securities outside of an investor’s home country. This may offer exposure to diverse economies and markets.
4. What are the returns on international mutual funds?
Historical returns on international mutual funds are varied. Investors must conduct thorough research into the specific international fund’s historical returns before investing.
5. Are international funds safe?
Investors interested in international mutual funds should be wary of currency fluctuations, and other risks attached to foreign investments. Although international mutual funds can diversify your portfolio by reducing the impact of local market fluctuations, offering access to new companies and industries, investors should be wary of the risks associated with them before investing.
6. What is the lock-in period for International mutual funds?
The lock-in period for international mutual funds typically ranges from 1 to 3 years. This period restricts withdrawals potentially to discourage short-term trading and encourage long-term investment.
Srishti Mathur
I live in two worlds, one is a world of dogs.
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