Mutual Funds
International funds enable investments in markets outside India, by holding in their portfolio one or more of the following:
- Equity of companies listed abroad.
- ADRs and GDRs of Indian companies.
- Debt of companies listed abroad.
- ETFs of other countries.
- Units of passive index funds in other countries.
- Units of actively managed mutual funds in other countries.
International equity funds may also hold some of their portfolios in Indian equity or debt.
- They can hold some portion of the portfolio in money market instruments to manage liquidity.
International funds gives the investor additional benefits of
- Diversification, since global markets may have a low correlation with domestic markets.
- Investment options that may not be available domestically.
- Access to companies that are global leaders in their field.
There are risks associated with investing in such funds, such as:
- Political events and macro economic factors that are less familiar and therefore difficult to interpret
- Movements in foreign exchange rate may affect the return on redemption.
- Countries may change their investment policy towards global investors.
For the purpose of taxation, these funds are considered as non-equity oriented mutual fund schemes.