3 Things to Keep in Mind before Investing in International Mutual Funds

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Though it is international, mutual fund investing is very similar to domestic markets. Mutual Fund which invests money in funds offered by companies other than their home country. It may also be called as a foreign fund.

However, it is different from global funds, which invest around the world. Investing in international markets may give you an opportunity to invest in some of the best funds in the international market.

3 Things to Keep in Mind before Investing in International Mutual Funds


Diversification mantra applies here also. It is better to invest in mix of stocks, from different sectors and industries. One should make sure that portfolio is diversified in such a way that it is invested in different markets such as New York Stock Exchange, London Stock Exchange etc. As it is not necessary that all markets may fall at the same time. If one market fall, there are chances that others may rise or show resilience.

Don't invest everything in Foreign Market

Investing 100% in international market can be very risky as it may lead to erosion of investments if markets crash. If you wish for maximum benefit one should stick to the formula, which says invest 70 per cent of mutual funds in the domestic market and remaining 30 per cent invest in international market.

Investing 100 per cent in domestic or international market will not reap you maximum benefit.

Currency Fluctuation

Any changes in currency fluctuation will make your investment risky. Say for example, if rupee rises against the dollar and if any profits earned on international investment will nullify due to rupee appreciation.

The other factors which can impact your investments are:

  • Any changes in political and the economy in the country can affect your investment.
  • One should also properly understand the country's financial stability before investing.

To be a wise investor, one should do research about the international market that you choose to include in your portfolio. One can appoint fund manager if looking for long term growth. However, for that one needs to pay hefty amount as professional fee for his service.


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