Global Funds or Global Mutual Fund is becoming a popular investment option. Global Fund allows you to invest in international markets. If the Indian stock market is not performing well, investors usually look for other investment options, which can help them to earn a better return. A global fund is one of such alternative investment option. Global fund give you an opportunity to invest in the global market.
So, let’s begin by understanding What are Global Funds? What are features of Global Funds? Why should you invest in Global Mutual Funds?
What are Global Funds?
Global Funds are funds that primarily invest in the companies which are spread across the world. The basic idea behind the global fund is to provide global investment opportunities to the investor. The global fund invests globally as well as in the country of fund origin.
For example, the global fund of India invests in companies of USA, UK, China, multiple other countries including India.
So, you get the best of both world local market as well as global market. This means you can beat market fluctuations happening in your country as well as earn good returns.
What is difference between Global Funds and International Funds?
The basic difference between the global fund and an international fund is – A global mutual fund invests in assets around the world including home country. Whereas, international funds invest in assets across the world excluding home country.
So, if you want to only invest in the international market except for home country (e.g India) you should select International fund. However, if you want to invest globally including home country you should select global funds for investment.
What are features of Global Funds?
Some of the key features of global funds which make them very good investment options are –
- Diversification – This fund offers very good diversification as it invests in different stocks in different countries. It is like putting your eggs in the different basket instead of a single basket.
- Risk Factor – The risk factor associated with the global fund is relatively low as it offers an advantage of diversification. However, these funds are prone to risk associated with country-specific market condition and economy.
- Currency Risk – Another risk factor associated with a global fund is currency conversion. International currency rates fluctuation cause a major impact on the performance of such funds. This is called as currency risk.
- Investment in Own country – Global mutual fund invests in own country as well as other global countries with good market potential.
- Hedge – You can use the global fund as a very good tool to hedge against inflation.
- Returns – Returns of global fund vary and depends upon multiple parameters.
- Term – Most of the global offer good returns over the long run. So, this fund is more suitable for long-term investors.
Also Read – How to Invest in Mutual Funds via Paytm Money?
Top 5 Popular Global Funds in India
Some of the most popular global funds in India are given below.
- ICICI Prudential Global Stable Equity Fund
- Principal Global Opportunities Fund
- DHFL Pramerica Global Agribusiness Offshore Fund
- Invesco India Feeder – Invesco Global Equity Income Fund
- SBI Magnum Global Fund
Note – Above funds are selected based on historical performance. Some funds have generated extra ordinary returns while other funds have generated moderate returns.
Types of Global Funds
Global Funds that invest directly – The fund that directly invests in global equities by a local fund manager, instead of relying on a fund manager offshore are classified in the category of a fund which invest directly.
Indirect Global Funds – The fund that pools money from the local investor and pushes it to the offshore fund manager for making investment are classified in the category of indirect global funds. These funds generally invest the investor’s money in a basket of offshore funds.
Region Specific Funds – Some global funds are region specific. This means it invests in a specific region or country. This type of strategy works well if the region or country has high growth potential. You have to be careful if you are planning to invest in the region-specific fund as they are riskier.
Theme based global funds – The funds that invest money on a specific theme or sector such as energy, real estate, agriculture, mining, commodities etc. As these funds are restricted to specific theme it can put investors at risk.
Why should you invest in Global Mutual Funds?
Investing is global funds means taking a smart move. It gives you the benefit of global exposure and diversification. However, it comes with additional country-specific and currency risk. These types of funds are not recommended for a new investor. If you are high risk-taking investor and understand global market condition or associated risk you can plan to invest in global funds.
Do you invest in Global Mutual Funds? Do share your views and opinion in the comment section given below.