Indian currency and stock markets go in tandem; this said with the falling rupee, equities tend to go slow in their performance as in the present case where rupee has fallen past the psychological 70 mark and has in today's trade also opened lower at 70.19 apiece for a dollar. The rupee's fall is mainly on account of the momentum gained in the greenback for quite some time due to the global headwinds such as the ongoing US-China trade tension.
The dollar gaining strength as well as the threat to the Lira currency has cast its huge impact over other emerging market currencies, and so far Indian currency rupee has been the worst hit. While, this has hit the households of those who have dealings in forex in some or the other way in paramount way, the effect to an extent can be offset by diversifying one's investment portfolio to include international funds.
What are international funds and how these are advantageous?
These funds invest in schemes with exposure to foreign companies that provide investor to participate in the growth story of these companies and hence gain during their bull run. Also, they serve as a good hedge against any kind of sharp fluctuation in currency.
Who should take the international funds route?
Those who want to safeguard themselves from the currency crisis back home which in one or the other cast an effect on the equities can consider investing in these funds.
Also, persons looking to have some of their corpus invested in big international stocks such as Amazon, Google etc can take the route.
It is also a good exposure for those who in future time have plans to move abroad or will need to incur some expenditure in foreign currencies.
Returns from international funds
International funds have depending on the growth rate in the economy as well as currency movement will provide results to the investor. And in light of the bull run infact the biggest and longest ever bull run seen date, the international funds with exposure in the US markets have managed to offer a staggering return to the tune of 19-25%.
These set of investments are not risk-free and are exposed to country, political and currency risk as in a case when the currency appreciates against the currency in which the fund is invested, then returns will go down.
Gains realised from redeeming international funds before 3 years of investment is taxed as per the tax slab of the investor. Gains realised from redeeming international funds after 3 years is taxed at 20 percent with indexation.