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Offshore Funds – Should you invest in Offshore Funds?

Offshore Funds for Investment

Offshore funds are types of mutual funds that invest in the international market. Offshore funds are popular as overseas funds or International Funds. These types of funds invest in the equity and debt markets of a specific country or region. These types of funds invest their money directly or via funds of fund. If you have surplus money and you are looking for diversification you can take a look at the Offshore Fund.

offshore funds

Offshore funds allow investors to select funds based on geographies such as USA, UK, Europe, Japan, Brazil etc. It also allows theme-specific investments such as agriculture, power, real estate, mining etc.  Few funds restrict the investment to some geography, while others are global funds which invest money globally.

Indian Investor can invest in these types of funds. Investment should be done with rupee denomination. The method of investing in this fund is the same. You need to submit the application form along with a cheque. Alternatively, you can also make an investment online.

There are many reasons to invest in the offshore fund. Few compelling reasons are given below.

  • Investors who are looking for diversification of portfolio and ready to invest in the international market.
  • Investors who want to take advantage of the exchange rate difference.
  • The domestic market is not performing well and the global market is expected to perform well.

Also Read – Best Stocks for Long Term Investment in India 2019

Benefits of Investing in Offshore Funds

There are multiple benefits of investing in offshore fund. Few of them are mentioned below.

  1. You can get exposure to invest in global market different geographies and different investment instruments.
  2. You need not to bother about selection of stock because mutual fund manage your investment in the international market.
  3. You can benefit of investing in global stocks such as Apple, Amazon, Google etc.
  4. If global economy is performing well compared to domestic economy you can get higher returns.
  5. You can get advantage of exchange rate benefit between the two economies. This means if you have invested in fund that is based at USA. You will get benefit if dollar appreciate and rupee becomes weak.

Risk for Investing in Offshore Funds

Currency Risk

International investment is prone to currency risk. Fluctuation in the currency conversation rate affects your investment. For example, If you have invested in US-centric fund and if the dollar becomes weaker your return will be affected negatively.

Country Specific Market Risk

These types of fund are prone to country specific market risk. Any change in the economic policy, tax laws and polices affects your investment. You need to be vigilant for the offshore economic conditions.

Should you invest in Offshore Funds?

You should go for offshore funds only if you have surplus money and you are looking for diversification.

Looking at the current economic condition and political stability the Indian market is in much better condition. It does not make sense to invest in other economies such as USA or Europe. India is a growing economy and developing country you should consider investing your money in India.

If you want to allocate a small portion of your money in offshore fund make sure to consider your financial goal, risk appetite and investment horizon before investing. In addition to that consider following things before investing in offshore fund.

  • Carry out research on economic and political conditions of the country where you are planning to invest your money.
  • Only allocate small portion of your money in these funds.
  • Don’t go for country specific fund. Always select a fund with exposure to global opportunities.
  • Make sure to consider currency risk while investing these type of funds.
  • Invest only in the fund of emerging market and developed market.
  • Make sure to check fund reputation, historical returns and financial background of fund house before investing.

Do you invest your money in Offshore Funds?

Do share your experience in the comment section given below.

Shitanshu Kapadia
Shitanshu Kapadia
Hi, I am Shitanshu founder of moneyexcel.com. I am engaged in blogging & Digital Marketing for 10 years. The purpose of this blog is to share my experience, knowledge and help people in managing money. Please note that the views expressed on this Blog are clarifications meant for reference and guidance of the readers to explore further on the topics. These should not be construed as investment , tax, financial advice or legal opinion. Please consult a qualified financial planner and do your own due diligence before making any investment decision.