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International Mutual Funds offer investors a way to diversify their portfolios and benefit from growth opportunities in global markets. However, it is important to understand the types, benefits, risks, and taxation of these funds before investing. In this article, we will explain how to invest in international Mutual Funds from India.
International Mutual Funds in India are a type of Mutual Fund that invests in companies and securities listed outside India. These funds pool money from multiple investors and invest in instruments such as international equities, global bonds, Exchange-Traded Funds (ETFs), and global thematic or sector-based indices.
International Mutual Funds can be classified based on their geographic exposure or thematic investment focus.
Type of International Mutual Fund
Meaning
Examples of Investment Focus
Country – Specific Funds
These funds only invest in a company from a single foreign country.
US equities, Japan – focused companies
Region – Specific Funds
Invest across multiple countries within a particular region.
Europe, Asia – Pacific, Emerging Markets
Global Funds
Invest in companies across countries and regions worldwide.
Developed and emerging market companies
Theme – Based International Funds
Focus on a specific sector, industry, or investment theme
Technology, healthcare, clean energy, AI
Indian investors looking for exposure to foreign markets can consider investing in international Mutual Funds. These funds provide access to global markets without requiring investors to open a foreign trading account. Some of the key reasons to invest in international Mutual Funds include:
International Mutual Funds and domestic Mutual Funds differ mainly in terms of investment geography, market exposure, risk factors, and return drivers.
Basis of Difference
International Mutual Funds
Domestic Mutual Funds
Investment Location
Invest in foreign companies and global markets
Invest primarily in Indian companies and markets
Diversification
Offer global diversification across countries and regions
Focus mainly on the Indian economy and markets
Currency Exposure
Affected by foreign exchange rate movements
Mostly unaffected by currency fluctuations
Risk Factors
Influenced by global economic and geopolitical events
Influenced mainly by domestic market conditions
Growth Opportunities
Provide access to global sectors and international companies
Provide exposure to India-focused growth opportunities
Taxation
Generally taxed as non-equity Mutual Funds in India
Equity funds may receive different tax treatment based on allocation
Investing in international Mutual Funds from India can usually be completed through Mutual Fund platforms, Asset Management Companies (AMCs), stockbrokers, or banking apps. Here is a step-by-step guide:
Determine why you want to invest in international Mutual Funds, such as portfolio diversification, exposure to global companies, or access to specific sectors and markets.
International Mutual Funds are affected by global market movements and currency fluctuations. Choose a fund that matches your risk tolerance and investment horizon.
Review factors such as investment objective, geographic exposure, expense ratio, past performance, and portfolio holdings before selecting a fund.
You can invest through AMC websites, Mutual Fund investment platforms, stockbrokers, or banking apps that offer Mutual Fund services.
You can invest regularly through a Systematic Investment Plan (SIP) or make a one-time lump sum investment.
Manage your international investments alongside your everyday banking with a DBS Treasures Wealth Account and access a range of wealth and banking services through a single relationship.
The right international Mutual Fund depends on factors such as geographic exposure, sector focus, risk level, expense ratio, and long-term investment goals.
Fund Name
1-Year Returns
3-Year Returns
Nippon India Taiwan Equity Fund
275.4%
54.3%
DSP World Mining Fund of Fund
146.9%
51.0%
HSBC Brazil Fund
90.8%
24.9%
ICICI Pru Strategic Metal & Energy FoF
85.0%
28.8%
Mirae Asset NYSE FANG+ ETF FoF
23.0%
64.0%
Note: The funds listed above are for informational purposes only and should not be considered investment recommendations or financial advice.
International Mutual Funds may be suitable for investors who want global diversification and have a long-term investment horizon. These funds may be appropriate for:
Before investing in international Mutual Funds, investors should evaluate the following factors:
While international Mutual Funds provide global diversification, they also involve certain risks that investors should consider.
In India, international Mutual Funds are generally taxed as non-equity Mutual Funds because they primarily invest in overseas securities.
Type of Gain
Tax Treatment
Short-Term Capital Gains (STCG)
Gains are added to the investor’s income and taxed according to the applicable income tax slab.
Long-Term Capital Gains (LTCG)
Gains are also taxed as per the applicable income tax slab under the revised debt fund taxation rules.
Dividend Income
Dividends received from international Mutual Funds are taxable according to the investor’s income tax slab rate.
Investors should also consider factors such as currency fluctuations, foreign taxation policies, and changes in Indian tax regulations before investing in international Mutual Funds.
International Mutual Funds can help Indian investors diversify their portfolios and gain exposure to global markets, industries, and investment themes. However, these funds also carry risks related to currency fluctuations, geopolitical events, and international market volatility. Before investing, it is important to evaluate your financial goals, risk appetite, investment horizon, and the fund’s underlying portfolio and taxation structure. Pair your international investments with a premium savings account from DBS Treasures to manage your wealth seamlessly. Account holders can access banking and wealth management services through a single digital banking platform.
Disclaimer: The information provided in this article is for general informational purposes only. For specific guidance or details, please consult with your Relationship Manager or a relevant expert.
