Should you start SIP investment for international funds?

812 Views

People generally invest in mutual funds with an eye on wealth generation for the future. After the money is pooled from a group of investors, the asset management company managing the mutual funds allocates the funds to different securities. The said action results in wealth generation over time. Once enough wealth is generated, the revenue is distributed proportionately amongst the different investors. But just investing in mutual funds isn’t enough. You also need to select the right variant of the mutual fund.

Debt mutual funds, equity funds, hybrid funds, and even international mutual funds are some of the prominent examples of different types of mutual funds available in the market. Of these, international funds are known for bringing an element of geographical diversification to an investor’s mutual fund portfolio. Listed below are some of the interesting details of an international fund:

What are international funds?

Simply put, international funds are the type of mutual funds that are known for investing in companies that are outside India. Also referred to as overseas or foreign funds,these funds do come with a risk of exposure, but, simultaneously, there are also chances of rewards for taking the risks. Generally, people use it as an alternative and (or) long-term investment option. As mutual fund investors getting increasingly aware of investment options available around the world, the need for portfolio diversification is felt more significant than ever.

A diverse investment plan can help not only in spreading the risks but also in tappingthe earning potential of different markets around the world. Asset management companies or AMCs are known for regularly coming up with innovative schemes that relate to things like sectors,risk classes, and market types, as more and more experimental investors keep on entering the world of investments.

Are there any advantages associated with these funds?

They are known for being liquid:

While allocating funds to any investment tool one of the important aspects you need to check is the liquidity the tool offers. Liquid assetsare known forbeing those assets whose shares can be exchanged for cash in a short duration.An ideal short duration, in this case, will be within a business day or two. Afterselling off your share, you will getan amount that is equal to your investment’s value when the market closes. But, as the value of a fund directly depends on the current market conditions and performance, the value thatyou receive during redemption may be above or below the original cost of the share.

They help contributeto a cost-effective portfolio:

You can also usethe exposure to the foreign market to achieve major financial goals (like your child’s higher education or wedding).

You get international exposure that too under expert management:

If you are thinking of opting for an international mutual fund, it is of utmost importance for you to have adequate knowledge about things like the target country’s industry andeconomy. But like every other mutual fund, even for this one, you can enjoy professional help. Hence, it is possible for you to exposure to the global market, even in case you were not familiar with markets outside India.

These funds can be diversified:

Generally, an investment portfolio consists of a combination of high, medium, and low-risk investments. When the domestic market is going through a bear phase, if your funds are invested in international funds, the revenue from the market abroad can cushion the losses.

How to invest in these funds?

If you like a lot of people from India, come from a middle-class background, it would be prudent for you to invest in an international fund with the help of a systematic investment plan. Through this method, you can invest a certain amount at regular intervals. Moreover, with a SIP, you can start with a low amount.