How can you invest in international markets with the help of fund of funds?

Fund of funds to invest in international markets!

invest in international markets

Investing in international markets has become lucrative in recent years. This is especially true in the global connected world where tech stocks globally are outperforming the markets. Some of the top tech stocks, like Google, Apple, Microsoft, Amazon etc., are favourites of investors. The returns of the top tech stocks have been phenomenal over the last ten years. If you want to invest in the global markets, you will be facing a lack of options. Investing in specific stocks is risky and will involve a high cost. You might have to shell out a bomb as a single stock of Tesla might cost more than Rs 10,00,000.

You can make use of fund of funds to invest in the global markets. A fund of funds is like a mutual fund which invests in another mutual fund situated overseas. The overseas mutual fund will invest in stocks, ETFs, index funds, etc. So, you will indirectly be invested in the global markets with the help of fund of funds.

Related: Focused funds Vs Diversified Mutual Funds: Which one to choose?

How to invest in international stock markets from India?

Fund of funds can help you invest in the international markets. You can own the mutual fund in India, and that mutual fund will invest in the global market mutual fund. You can access theme-based opportunities as well with the help of fund of funds. The opportunity is expanding globally, and the specific theme can be selected as per your requirements.

Top performing fund of funds

The top performing fund of funds are:-

The top performing fund of funds are

As can be seen, last year's returns were bad because of the volatility in the stock markets. The stock market volatility of last year was because of varied reasons like the Russia-Ukraine war, high inflation, increase in interest rates, global supply chain disruptions, etc. But even in these volatile times, Edelweiss US Value Equity Offshore Fund has given a positive return. ICICI Prudential US Bluechip Equity Fund has the highest annualized 5-year return of 14.18%. This means that the fund is consistent in its returns.

Related: Different types of funds available under mutual funds

Taxation of fund of funds and what you should do!

A fund of funds invests in equity-oriented products. But as per the taxation laws of India, it is not considered an equity-oriented investment. It is treated as a non-equity-oriented investment and taxed accordingly. Long-term investments are taxed at 20%, along with the indexation benefits. If you sell before three years, you will be taxed for short-term capital gains. If you want to invest in the international markets, a fund of funds is a good choice for investors.

Related: Dummies Guide to mutual funds

Investing Abroad through Mutual Funds by CA Rachana Ranade


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