So, providing a platform to diversify risk both across nations as well as currencies and also enabling to garner returns when the domestic market is under-performing, such global feeder funds are primarily of two kinds:
1. Funds specific to a geography
2. Theme based global feeder funds
Investment by such global feeder funds is either made directly in foreign companies. However, some others referred as Fund of funds schemes (F invest the entire corpus in their foreign parent's mutual fund scheme. Such foreign schemes then decides about investing in bonds or stocks of foreign companies.
Geography-specific global funds: Such funds invest in a particular market such as US, Brazil or China or in a region such as South East, Asian region or in emerging economies. For eg: HSBC Emerging Markets Fund scheme invest in economies that qualify as emerging nations in the global markets. Some other funds invests across emerging economies and globe.
Thematic global funds: Such global feeder funds invest in international companies of specific theme or sector. Such as firms engaged in gold-mining activities, agri-business, real estate or in energy domain. In the thematic global funds category, gold-mining companies emerged to be the first sector introduced by fund houses and it proved as an alternative investment option to gold ETFs in India.
Such funds are however apt for investors who have amply diversified their investment portfolio in the domestic market and are now on the look out for some exclusive investment product in the international market. Also, investors taking a plunge into such thematic based global feeder funds should have adequate know-how in respect of the international markets as well as specific sectors.