Is investing in mutual funds a good idea in india

Weed out the funds that are not giving good returns as compared to their peers. MF News. Must Read.

While selecting an investment avenue, you have to match your own risk profile with the risks associated with the product before investing.

Mutual funds in India work in much the same way as mutual funds in the United States. Like their American counterparts, Indian mutual funds pool the investments of many shareholders and invest them in a variety of securities depending on the goals of the fund. Also like U. Mutual funds are a popular investment option in India because, like American funds, they offer automatic diversification, liquidity, and professional management. Any type of mutual fund that exists in the U. There are mutual funds that invest in equity or stocks and are managed to achieve a range of goals.

Stock Market

With the Indian rupee falling, especially against the US dollar, many investors may be contemplating on investing in international mutual funds. However, before doing so, one should have a clear understanding of what international funds are, what should be the rationale for investing in such funds and what are the associated risks. Investments of these funds can be either in equity or debt or in other asset classes such as commodities, real estate, among others. In addition to creating opportunity to invest globally, these funds help individuals achieve geographical diversification and at times serve as a hedge against the falling domestic currency. Investments in international funds are worthwhile especially if the domestic economy is facing long spells of economic deflation and there is a dearth of overall investment opportunities. There are no clear-cut categories of international funds.

Our list of top mutual fund schemes that you may consider to invest in 2019.

With the Indian mutuaal falling, especially against the US dollar, many investors may be contemplating on investing in international mutual funds. However, before doing so, one should have a clear understanding of what international funds are, what should be the rationale for investing in such funds and what are the associated risks. Investments of these funds can be either in equity or debt or in other asset classes such as commodities, real estate, among.

In addition to creating opportunity ffunds invest globally, these funds help individuals achieve geographical diversification and at times serve as a hedge against the falling domestic currency.

Investments in international funds are worthwhile especially if the domestic economy is facing long spells of economic runds and there is a dearth of overall investment opportunities.

There are no clear-cut is investing in mutual funds a good idea in india of international funds. However, they can be differentiated by investment features. For example, some funds are country-specific international yood while some are commodity-based international funds which invest in specific commodities. Similarly, there are thematic funds which have specific iinvesting for investment asset class such as energy, agriculture, consumption, real-estate. Below are some of the international funds along with their historical returns.

First, these funds are relatively smaller in comparison to their Indian counterparts. Second, there is no real out performance in terms of both short-term and long-term gains. Given the context, the first logical question that comes to mind is, if there is no real outperformance, why is the investment in international funds worth the hassle?

It should be remembered that India continues to be the fastest economy in the world almost all sectors of the economy, have ample room for growth and as such there are ample opportunities for investors of all hues to participate in either equity or debt or both within the purview of domestic mutual funds. Currency Risk Among others, the most important risk associated with international funds is the currency risk. Since the investments made by the AMC in a foreign country is made in the foreign currency in addition to the risk associated with investments in various asset classes, one gets exposed to currency exchange risk.

The depreciation in the rupee actually helps improve the returns of international funds focused in the US markets. Currency risk, however, is a double-edged sword because the depreciation of the local currency against the foreign currency improves the returns on the investment. However, the appreciation of the local currency reduces the returns. Indian rupee has appreciated against all major currencies except the dollar. So, if we leave the US-focused funds, an investting investor would receive negative returns due to currency movements in other regions of the world.

For examle, in the current geo-political environment, countries such as Turkey, China, Russia, Iran, Canada, Mexico are going mtual a lot of economic upheaval due to the nature of their trade with the US. International funds, which are focused on these countries, would therefore be exposed to these risks, ineia would incia turn affect their returns. Should You Invest Now? For analysis purposes, following is the trend of the Indian rupee against the US dollar in the past one ida.

The depreciating rupee has a positive impact on the Idfa of international funds that invest in the US or use the US dollar as the investment currency. We believe that at this point initiating fresh investments in international funds solely based on the depreciation of the rupee against the US dollar is not advisable as there has been indis significant decline in the rupee already, and there is a limited room for further ihdia as we would witness fierce defense of the rupee both by the RBI and kn the Indian government if the js slides below 73 against the US dollar.

Moreover, we believe that investment in these schemes should be based on invexting idea of geographical diversification and for growth opportunities with the acknowledgment that these investments would carry both currency risk and geopolitical risks.

Finally, it should be emphasized that tracking currency movements and making a prediction on currency direction is not an easy task as it involves analysis of several factors and needs tools and data, which are usually not available to an average investor. In the Indian context, we believe that there are ample opportunities across sectors to generate decent returns. Therefore, making investment in international funds solely on the basis of achieving diversification is advisable whereas investing in these funds just because the rupee has funrs does not carry a lot of weight, at least at this point of time where the rupee has already depreciated significantly.

Like us on Facebook and follow us on Twitter. Updated: January 23, PM. With the rupee falling, especially against the US dollar, many investors may be contemplating on investing in international mutual funds. However, is it a good idea? Stock Market. Here are the eight accessories we recommend for a successful New Year’s Eve party. OnePlus surges ahead strongly as it completes five years in India.

Switch to Hindi Edition. Companies, Stock Quotes. Next Stories. International Funds. NAV Rs. AUM Cr. Kotak US equity Standard. Reliance Japan Equity Fund. Principal Global Opportunities Fund.

9 Common Mutual Funds Mistakes in India — How to invest in Mutual Funds in India — MFs explained

Stock Market

Must Read. OnePlus surges ahead strongly as it completes five years in India. Read more on Debt Mutual Funds. Best mutual funds to invest for 25 years. Companies, Stock Quotes.