Global Funds (Mutual Funds)

By investing in global funds, one can get global exposure to equity assets and hedge currency risk

 

Global funds give diversification and participation in equity assets in foreign countries. This diversifies the geographical risk of investing only in rupees, as investors get exposure in dollars and other currencies. Thus, investors not only get exposure to foreign equity assets, but can also hedge some of the risk if the rupee falls

However, these funds can also be used to hedge against currency risk for goals such as education abroad. “This is a good way to hedge for goals like saving for a child's foreign education  or a foreign trip in a future date  down the line. But you need to have a long-term view of at least five years when you link investments in global funds for goals like foreign education, foreign trip  as timing currency movement may not be easy

 

But one has to be selective and be cognizant of the currency risk. This means if you are investing in say global fixed-income assets, the currency risk matters because fixed income is a defensive sort of investment. But when you consider equity, it is a bit more complicated and basics are the same as any equity market; pick strong companies and remain invested for long periods of time. For you this translates to picking good quality international funds and staying put. Also, keep in mind that the current feeder fund structure available in India is not very tax effective; despite funds investing in overseas equity you will have capital gains tax to contend with even if you sell units after one year. 

Some of the Global Funds presently avaible for investments

 

FT India Feeder Franklin US Opportunities

MOST Shares NASDAQ ETF (Motilial)

US  Flexible Equity (DSP BlackRock)

Greater China Equity Offshore ( JP Morgan India)

Global Thematic Offshore (DWS)

International Equity Plan A (Brila Sun Life)

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