scorecardresearchLooking to invest in mutual funds buying global companies? Here's how their returns are

Looking to invest in mutual funds buying global companies? Here's how their returns are

Updated: 12 Apr 2022, 12:54 PM IST
TL;DR.

Some domestic mutual funds enable investors to invest in global markets. We evaluate their performance in past one year 

The largest return was posted by ICICI Prudential Small Cap Fund that gave a return of 41.52 percent.

The largest return was posted by ICICI Prudential Small Cap Fund that gave a return of 41.52 percent.

There are a number of mutual funds which allow you to invest in global financial markets. We evaluate their returns for past one year which surprisingly swing widely between a muted return of one percent to a 11.65 percent.

It is important to mention here that all of these funds have discontinued accepting investors’ contribution, for the time being, after they breached the maximum limit of $7 billion as prescribed for the entire industry by the Reserve Bank of India (RBI). However, the Association of Mutual Funds in India (AMFI) has requested the RBI to raise the limit.

ALSO READ: Overseas investment limit for mutual funds could be raised by up to 25 percent

In past one year Aditya Birla Sun Life International Equity Fund - Plan A gave one percent return. Some of these global mutual funds also gave returns in the negative territory such as Franklin Asian Equity Fund and Nippon India Japan Equity Fund. ICICI Prudential US Bluechip Equity Fund’s one year return was 3.59 percent.

At the same time, previous quarter returns have been muted. All of these funds posted negative returns in past quarter as shown in the chart below.

Mutual Fund Scheme    3-month return (%)1-year return (%)
Aditya Birla Sun Life International Equity Fund - Plan B -2.0311.65
ICICI Prudential US Bluechip Equity Fund   -4.043.59
Aditya Birla Sun Life International Equity Fund - Plan A -1.180.91
Nippon India US Equity Opportunities Fund -4.57-1.07
Nippon India Japan Equity Fund -12.40    -13.63
Franklin Asian Equity Fund   -11.64   -20.64

(Source: mutualfundindia.com; data as on April 11, 2022)

 

Why to invest abroad via mutual funds?

For the first time, mutual fund industry has hit the limit of maximum $7 billion prescribed by RBI for investing in foreign stocks, but the threshold for ETF i.e., $1 billion has not been breached. So, one can still invest in the exchange traded funds. The other way to invest in foreign stocks is to invest directly which could be a risky affair.

ALSO READ: Overseas investment limit for mutual funds could be raised by up to 25 percent

“The rule for individual investors who want to invest abroad is to stick to the limit of $2.5 lakh in a year — which is quite a meaningful amount. But then you have to decide which vehicle you have to choose. Mutual fund is safe and simple. It gives diversification which is an ultimate risk management mechanism,” says Dhirendra Kumar, CEO of Value Research.

First Published: 12 Apr 2022, 12:54 PM IST