Summary:
International mutual funds give investors like you the chance to diversify your portfolio by investing in exchanges such as the Nasdaq and New York Stock Exchange (NYSE). This means you can capitalise on the growth of international companies and sectors. In this article, we'll guide you through some of the top international mutual funds and rank them based on several factors like returns, expense ratio, and exit load, among others.
Do you want to invest in the international share market through mutual funds, but don’t know where to start? Don’t worry, we have the perfect solution for you: international mutual funds. These are easy and effective ways to invest in various stocks, bonds, and other securities from different countries and regions. You don’t need to be an expert in global markets, you just need to choose a fund that suits your financial goals and risk tolerance.
To help you begin your journey, we've curated a list of five top international mutual funds. But first, let's touch upon some essential points to keep in mind before investing.
6 factors to take into account for international mutual fund investments
When selecting an international mutual fund, there are certain key factors to pay attention to. The list we provide will also be curated based on these very considerations.
- Portfolio composition: This is about what assets the fund holds and how they are distributed. A well-diversified portfolio, with a balanced mix of stocks, bonds, and other securities, can help spread risk.
- Assets under management (AUM): Mutual funds or investment companies use AUM to show the total market value of the assets they manage for investors. This value indicates the fund's size and scale and can help assess its ability to handle large inflows and outflows.
- Fund performance history: This refers to how well the fund has performed over time. A consistent track record can be a good indicator of the fund's reliability and the expertise of its managers.
- Compound annual growth rate (CAGR): CAGR shows the rate at which an investment grows annually. In mutual funds, it's a key measure of the consistent growth of an investment, that accounts for compound growth. For our analysis, we'll be focusing on the one-year CAGR.
- Expense ratio and exit load: The expense ratio represents the cost of managing the fund and is expressed as a percentage of its assets. A lower ratio can mean fewer costs for you. The exit load is a fee charged when you withdraw your investment before a specified period.
A roundup of the 5 best-performing international mutual funds in 2023
We've curated a selection of the five top-performing international mutual funds for 2023. Our rankings are based on a thorough analysis using the factors mentioned earlier and on data available until 31 August 2023.
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Kotak Nasdaq 100 FoF
| AUM | CAGR | Expense ratio | Exit ratio |
| INR 2,624 crore | 33.50% | 0.29% | 0% |
The Kotak Nasdaq 100 FoF was launched on 2 February 2021. It offers a chance to invest in some of the world's leading companies through the Nasdaq 100 index. The fund allocates 99.8% of its assets to equity. This high allocation to equity makes it an extremely high-risk investment. Yet, with giants like Apple, Amazon, and Tesla in its portfolio, this fund provides a unique opportunity for you to benefit from the growth of these global powerhouses and makes it a top pick for international investment.
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Motilal Oswal Nasdaq 100 FoF Direct-Growth
| AUM | CAGR | Expense ratio | Exit ratio |
| INR 4,195 crore | 28.86% | 0.17% | !% if redeemed before 15 days |
The Motilal Oswal Nasdaq 100 FoF Direct-Growth began investing on 2 February 2021. Like its counterpart, the Kotak Nasdaq 100 FoF, it channels funds into overseas ETFs (exchange-traded funds) or index funds associated with the Nasdaq 100 index. 99.2% of its assets are allocated to large caps, which are companies with a high market capitalisation. While these firms are generally stable, their prices can shift notably in short periods, especially in volatile markets. This focus on large cap companies means the fund is categorised as high risk. Moreover, investing overseas introduces a currency risk, where fluctuations in the Indian rupee's value against other currencies can affect returns.
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Mirae Asset NYSE FANG+ ETF FoF
| AUM | CAGR | Expense ratio | Exit ratio |
| INR 1,085 crore | 50.54% | 0.04% | 0.50% if redeemed within 3 months |
The Mirae Asset NYSE FANG+ ETF FoF Direct-Growth began on 19 April 2021. "NYSE" stands for the New York Stock Exchange which is one of the world's premier stock trading platforms. "FANG+" represents a collection of leading tech companies that include Facebook, Apple, Amazon, Netflix, and Google. While many international mutual funds typically allocate about 99% to equity, this fund commits a full 100% to it. This complete equity allocation heightens the investment risk due to the volatile nature of stocks. However, the fund has achieved impressive returns by targeting dominant tech companies in both the technology and consumer sectors.
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Edelweiss US Technology Equity FoF
| AUM | CAGR | Expense ratio | Exit ratio |
| INR 2,111 crore | 35.34% | 1.44% | 1% if redeemed within 3 months |
Edelweiss US Technology Equity FoF began on 15 February 2020. The fund invests mainly in US technology companies by aligning itself with the Russell 1000 Equal Weighted Technology Index. This index equally represents the top 1000 US tech companies and ensures a balanced investment. While the fund primarily focuses on equity, it also allocates 0.5% to debt which provides a slight cushion against the volatile nature of the tech market.
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ICICI Prudential US Bluechip Equity Fund
| AUM | CAGR | Expense ratio | Exit ratio |
| INR 2,910 crore | 26.58% | 1.09% | 1% if redeemed within 1 year |
The ICICI Prudential US Bluechip Equity Fund was launched on 06 July, 2012 and is a product of ICICI's renowned expertise in the financial sector. While it has a high equity allocation of 97.7% and falls into the high-risk category like other funds on our list, its consistent delivery of decent to good returns over the years sets it apart. In comparison to its counterparts, this fund offers a somewhat more secure option because of ICICI's reputation among investors.
Wrapping up: Points to remember
- International mutual funds offer a convenient way to invest in global stocks, bonds, and other securities.
- Investing in Indian currency for international funds carries inherent risks due to currency fluctuations.
- Consider your risk tolerance and investment goals before investing in these funds, as they all carry significant risks.
Disclaimer
The investment options and stocks mentioned here are not recommendations. Please go through your own due diligence and conduct thorough research before investing. Investment in the securities market is subject to market risks. Please read the Risk Disclosure documents carefully before investing. Past performance of instruments/securities does not indicate their future performance. Due to the price fluctuation risk and the market risk, there is no guarantee that your personal investment objectives will be achieved.