International funds predominantly invest in stocks of companies listed out of India. These funds are also known as foreign or overseas funds.
The popularity of international funds has increased among investors in the last few years because of volatile local markets and economic fluctuations. These investments can be of higher risk exposure while offering the scope for higher returns. Both NRIs and residents can invest in these funds.
Here is a list of the top 10 international funds to invest in 2022:
- ICICI Prudential US Bluechip Equity Fund (Growth)
- Franklin India Feeder Franklin US Opportunities Fund
- Invesco India Feeder Mutual Fund
- PGIM India Global Equity Fund
- Aditya Birla Sun Life Mutual Fund
- Principal Global Opportunities Mutual Fund
- DSP BlackRock Mutual Fund
- Nippon India US Equity Fund
- Edelweiss Europe Mutual Fund
- Motilal Oswal Nasdaq 100 Fund of Fund (Growth)
What are the benefits of investing in international funds?
1. Portfolio diversification
A well-planned investment portfolio mixes high, medium, and low-risk investments. Therefore, when the home country market is declining, the returns from foreign companies can compensate.
2. Exposure to global companies
A single country doesn’t top the charts continuously. So, if you can’t invest in the country leading this year, you may have a chance next year. Most of the countries across the globe have their economic cycle. With investment exposure in different countries, you can experience minor falls and declines in your returns.
3. Help build a cost-effective portfolio
Investments in foreign lands can help you meet primary financial goals such as higher education and a child’s wedding. The overall value of Indian equities is also not cheap. With the help of a wisely-picked international fund, you can balance out your portfolio.
Before you invest in international funds, you must research thoroughly. Decide on the mutual fund scheme and the mode of payment as a lump sum or monthly SIP. Besides, read the offer document to understand the fund’s investment objective.
Taxation on international mutual funds
The taxation laws for international funds are the same as fixed-income funds and local-debt funds in India. If you hold mutual funds for less than three years, they are recognized as short-term funds. Funds held for over three years are termed long-term funds. Taxes on short-term capital gains for international funds are calculated as per the applicable income tax slab. Investors can enjoy indexation benefits on long-term funds. Long-term capital gains are taxed at 20% with indexation and 10% without indexation.
Investing in international funds can be tricky. NRIs, particularly, should consult market experts for better decision-making. You can download the Tata Capital Moneyfy App from the App Store or Google Play Store to get comprehensive mutual fund advice from experts.