Different type of global or international funds

Classroom

oi-Roshni

By Roshni Agarwal

Published: Wednesday, November 27, 2013, 14:44 [IST]

In view of the domestic market scenario, it makes sense to commit some proportion of your investible surplus towards global funds. Such mutual fund schemes are floated by different fund houses in India who after collecting funds to invest in global markets. Though a new avenue for investors, such global feeder funds are gaining momentum in terms of number and as per Association of Mutual Funds in India the number of such funds has increased considerably from 6 global feeder funds in the year 2008 to 23 in 2013.

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.

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