Diversification has often been advised as an investment strategy. However, while investing in a variety of asset classes is good for one's portfolio, diversification can also be looked at geographically.
For investors in India looking to bet on markets beyond their own country, international mutual funds sold by Asset Management Companies provide easy investment options including via SIPs (systematic investment plans) across geographies and asset categories.
Among these categories, US-focused mutual funds have been delivering solid performance even amid the coronavirus pandemic that drove benchmark indices of the American markets- S&P 500 and NASDAQ Composite- to all-time highs. In fact, if you were to compare their performance from the last three years or so, US-focused fund-of-funds and ETFs (exchange-traded funds) have outperformed equity funds (large-cap, mid-cap as well as small-cap) in India.
Here are 5 such strong US-focused mutual funds and their performance compared with the two benchmark indices of Indian markets (Sensex and Nifty 50):
|Mutual Fund||Mutual Fund House||Year-to-date||1 year||3 years|
|Franklin India Feeder Franklin US Opportunities Fund||Franklin Templeton Mutual Fund||31.52%||39.89%||25.21%|
|ICICI Prudential US Bluechip Equity Fund||ICICI Prudential Mutual Fund||7.02%||17.19%||17.45%|
|DSP US Flexible Equity Fund||DSP Mutual Fund||10.87%||18.98%||14.78%|
|Motilal Oswal NASDAQ 100 ETF||Motilal Oswal Mutual Fund||33.55%||46.96%||28.99%|
|Nippon India US Equity Opportunities Fund||Nippon India Mutual Fund||12.19%||20.82%||18.62%|
|Index||Year-to-date||1 year||3 years|
|NSE's Nifty 50||-4.70%||5.39%||14.22%|
Note: The comparisons are based on NAV (as on valueresearchonline.com) and performance of indices as on 15 September 2020.
Should you invest?
While international funds are good to diversify your investments, these could be risky for retail investors. US-focused funds are comparatively safer as some experts are of the opinion that American companies like Facebook, Amazon, Netflix, Alphabet, etc are well-placed to face any huge disruptions likely to happen in the global economy in the post-COVID-19 world. The US economy is also likely to see better recovery than India from the virus threat.
However, these funds, like any other equity fund, hold risks and could be looked at with long-term horizon.