Building A Global Portfolio Using Mutual Funds

Many investors often wonder about how to invest in global companies. But investing beyond India’s borders today is no longer a distant possibility. With a surge in platforms offering US mutual funds in India, retail investors can now tap into these global multinational companies alongside domestic holdings.

In this guide, we’ll explore how to invest in US stock market from India using mutual funds—demystifying jargon, walking through key steps, and helping you understand the process.

• Table of contents

• Understanding global investment
• What are global mutual funds?
• Are global and international mutual funds the same?
• Categories of global mutual funds
• Why consider global or international mutual funds?
• Risks involved in global investing

Understanding global investment

So, what is global investment? Simply put, it involves placing money into companies listed outside your home country. By diversifying geographically, your portfolio may have potential opportunities of weathering local economic fluctuations.

However, international exposure introduces its own considerations as well. Currency movements, differing regulations, and geopolitical events can all influence your investment outcomes. This is why it is advised to begin every investment, especially in overseas markets, with a clear risk profile assessment.

Read Also: Global ETFs: Meaning, Benefits and How to Invest?

What are global mutual funds?

Global mutual funds are schemes that allocate a portion—or all—of their portfolio to non-Indian equities. These mutual funds pool resources from many investors to buy equities or bonds worldwide. Unlike direct stocks, global mutual funds may offer:

• Professional management, where fund managers can research and rebalance holdings.
• Diversification, spreading potential risk across countries and sectors.
• Ease of access, since you can invest through distributors under regular plans.

By choosing a fund aligned with your goals, you gain exposure to international corporations without having to juggle multiple overseas accounts.

Are global and international mutual funds the same?

Although global and international mutual funds are often used interchangeably, there’s a subtle distinction between the two:

• International funds invest exclusively outside India (for example, Europe or Asia ex-Japan).
• Global funds hold both domestic and foreign assets.

Understanding this nuance helps you select the strategy that is suitable for you.

Categories of global mutual funds

Mutual funds investing in global or international equities typically belong to the following mutual fund categories:

Thematic mutual funds: Some funds follow a global or international theme, investing either in select countries or a multiple of countries.

Global ETFs tracking international indices.

Fund of Funds investing in international funds.

Some of these schemes are equity-oriented, some invest in debt securities, and some can hold a combination of both. Each category carries its own risk-return profile, so consider your time horizon and risk appetite before investing.

Why consider global or international mutual funds?

Investors are often attracted to overseas funds for several reasons:

• Access to tech giants that dominate global indices.
• Currency diversification, which can add a potential buffer when the rupee weakens.
• Broader industry reach, since some sectors are more prominent in international markets.

Whether you wish to participate in global innovation or simply mitigate geographic risk, stocks from leading multinationals can become part of your portfolio through these funds.

Read Also: Thematic vs. Sector Funds: Key Differences and Which is Better?

Risks involved in global investing

No investment strategy is without risks. Key risks include:

• Currency fluctuation: A stronger rupee can erode returns when converting back.
• Regulatory variations: Different markets follow unique accounting and governance norms.
• Geopolitical tensions: Trade disputes or sanctions can impact sectors overnight.

Risk cannot be eliminated but may be reduced through proper diversification and research. Always read a fund’s offer document, check its track record, and align your choice with your risk appetite.

Conclusion

Venturing into global markets through mutual funds can be a way to diversify your investments. Global mutual funds potentially enable Indian investors to participate in the growth of global markets without direct stock picking. Through global mutual funds, you can benefit from diversification, professional fund management, and the convenience of SIP investment plans or regular lumpsum contributions.

Consider currency fluctuations, geopolitical risks, and expense ratios before choosing a fund. By understanding the various fund categories and monitoring risks, you too can participate in world markets through reliable Indian mutual fund houses.

FAQs:

What are global mutual funds?

Global mutual funds collect capital from investors to purchase stocks or bonds in India as well as internationally. Global funds provide investors with geographic diversification under professional management.

Why should Indians consider investing in global mutual funds?

Global mutual funds give Indian investors exposure to international companies, may offer a potential hedge against rupee depreciation, and provide additional diversification through exposure to multiple economies.

How does one invest in global companies via mutual funds?

Identify a global or international fund available in India and set up an investment account through a distributor under the regular plan or directly with the asset management company under the direct plan. You can invest in lumpsum or start an SIP investment plan for disciplined investing.

What are the risks for a global mutual fund?

The key risks are currency fluctuations, different regulatory environments, and global instability that can impact international markets. These risks can be mitigated but not eliminated through proper research and diversification.

What is the difference between global and international mutual funds?

International funds invest only in foreign assets. Global funds hold both Indian and foreign assets.