The World Is Your Oyster

Funds investing in overseas equity are mushrooming. It’s necessary not just to pick the right ones but also to have the right expectations from your international allocation.

Thanks to a bull run in the markets worldwide, international investing has become the talk of the town and as a result, there has been a flurry of international-fund launches over the last one year. Out of the 63 funds that this category hosts as of December 2021, around one-third were launched in 2021 alone. There is also a growing realisation among Indian investors that investing part of their corpus in international funds can help in better diversification.

The rise in assets of international funds also speaks tonnes about their growing popularity. The category AUM had grown more than four times in the 2020 year on year and with a further rise of 177 per cent, it increased to ₹44,132 crore as of November 2021 from ₹15,914 crore in December 2020.

At Value Research, we view international equity as a supplementary allocation (20–30 per cent) to an investor’s core equity investments. Being a developing country, India is likely to deliver better equity returns vis-à-vis developed nations. So, the main objective of diversifying overseas should be to protect your portfolio from going completely haywire from a sharp correction in the Indian markets.

Playing the international game