Any reputable financial planner would advise you to build a well-diversified portfolio. This means you’ll need to invest across a wide range of asset classes – and an even better way to build a diverse portfolio is to diversify across several markets rather than relying solely on the investment tools available in your home country. Nationlearn is addressing some features of International Mutual Funds and how it works.
1-Diversification: An international mutual fund provides diversification, which is important for a successful investment portfolio. The portfolio is not limited to Indian markets and gives investors access to a wide range of financial instruments all over the world.
2-Exposure to a Variety of Markets: When you invest abroad, your mutual fund can invest in a variety of financial instruments from around the world. This means you will profit from the gains of various economies. Investing across economies also helps an investor to reduce risk and maintain a minimum loss during periods of market uncertainty.
3-Exposure to Risk
While an international mutual fund can provide higher returns due to its diverse portfolio and investments in a variety of financial instruments, the risk is also higher. This is because international markets are subject to political, global, and economic threats, all of which can impact the investment’s outcome.
4-Management by Professionals: If you’re a new investor, judging markets in your own country, let alone markets in other countries, would be challenging. When you invest in an international mutual fund, however, a fund manager would be able to guide you to the best investments using extensive data, technological expertise, and experience gained from years of investing in international funds.