Top International Mutual Funds for Smart Investing in 2024
Investors who want to invest outside of the Indian market can invest in international mutual funds. These foreign mutual funds represent a dynamic and increasingly popular investment avenue in today’s interconnected global economy. Many investors look to expand beyond their home countries and invest internationally in equity investments. International Mutual Funds provide an effective way to achieve this global diversification. Therefore, in this blog, we will explore the meaning, types, advantages, features, and more of international mutual funds. Let’s begin.
Best International Mutual Funds in India for 2024
Here is a list of the best international funds in India based on their one-year returns:
| Name | Sub-Category | AUM (Rs. in cr.) | Expense Ratio (%) | CAGR 5Y (%) | CAGR 10Y (%) |
|---|---|---|---|---|---|
| ICICI Pru MNC Fund | Thematic Fund - MNC | 1,752.74 | 1.04 | 23.1 | 22.37 |
| SBI Magnum Global Fund | Thematic Fund - MNC | 6,549.98 | 1.19 | 16.17 | 9.49 |
| ICICI Pru US Bluechip Equity Fund | Thematic Fund - Global | 3,221.37 | 1.19 | 15.96 | 22.67 |
| Nippon India US Equity Opp Fund | Thematic Fund - Global | 679.12 | 1.3 | 15.79 | 28.48 |
| UTI MNC Fund | Thematic Fund - MNC | 3,030.90 | 1.19 | 15.29 | 22.57 |
| Aditya Birla SL MNC Fund | Thematic Fund - MNC | 3,956.23 | 1.28 | 12.17 | 22.99 |
| Aditya Birla SL Intl. Equity Fund | Thematic Fund - Global | 182.93 | 1.93 | 9 | 15.37 |
| Nippon India Japan Equity Fund | Thematic Fund - Global | 258.99 | 1.27 | 6.55 | 15.67 |
| Franklin Asian Equity Fund | Thematic Fund - Global | 250.36 | 1.68 | 4.44 | 14.73 |
Disclaimer: Please note that the above list is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing.
Note: The data on the list is from 19th November 2024. This data is derived from the Tickertape Mutual Funds Screener.
- Plan: Growth
- Category: Thematic Funds: MNC and Global
- CAGR 5Y: Sorted from Highest to Lowest
🚀 Pro Tip: You can use Tickertape’s Mutual Fund Screener to research and evaluate funds with over 50+ pre-loaded filters and parameters.
Top 10 International Mutual Funds in India: An Overview
Here is a brief overview of the international mutual funds listed above:
ICICI Prudential MNC Fund
ICICI Prudential MNC Fund, launched in 2014, focuses on multinational corporations (MNCs) operating in India to capture their growth potential. On 19th November 2024, the fund reported an AUM of Rs. 1,752.74 cr. with an expense ratio of 1.04%. The 5-year CAGR was 23.10%, and the 10-year CAGR stood at 22.37%.
SBI Magnum Global Fund
SBI Magnum Global Fund, introduced in 1994, invests in multinational companies across various sectors for long-term capital growth. On 19th November 2024, the fund had an AUM of Rs. 6,549.98 cr. and an expense ratio of 1.19%. The 5-year CAGR was 16.17%, while the 10-year CAGR stood at 9.49%.
ICICI Prudential US Bluechip Equity Fund
ICICI Prudential US Bluechip Equity Fund, launched in 2012, focuses on investing in large-cap US companies to provide global exposure. As of 19th November 2024, the fund reported an AUM of Rs. 3,221.37 cr. with an expense ratio of 1.19%. The 5-year CAGR was 15.96%, and the 10-year CAGR stood at 22.67%.
Nippon India US Equity Opportunities Fund
Nippon India US Equity Opportunities Fund, established in 2015, invests in US-based companies with growth potential in various industries. On 19th November 2024, the AUM was Rs. 679.12 cr., and the expense ratio was 1.30%. The 5-year CAGR was 15.79%, while the 10-year CAGR stood at 28.48%.
UTI MNC Fund
UTI MNC Fund, launched in 1998, focuses on multinational companies in India, leveraging their competitive advantages for growth. As of 19th November 2024, the fund’s AUM was Rs. 3,030.90 cr., with an expense ratio of 1.19%. The 5-year CAGR was 15.29%, and the 10-year CAGR stood at 22.57%.
Aditya Birla Sun Life MNC Fund
Aditya Birla Sun Life MNC Fund, introduced in 1994, invests in multinational companies with proven track records and robust business models. On 19th November 2024, the fund’s AUM was Rs. 3,956.23 cr. with an expense ratio of 1.28%. The 5-year CAGR was 12.17%, while the 10-year CAGR stood at 22.99%.
Aditya Birla Sun Life International Equity Fund
Aditya Birla Sun Life International Equity Fund, launched in 2007, invests in global equities to provide international diversification. On 19th November 2024, the fund had an AUM of Rs. 182.93 cr. with an expense ratio of 1.93%. The 5-year CAGR was 9.00%, and the 10-year CAGR stood at 15.37%.
Nippon India Japan Equity Fund
Nippon India Japan Equity Fund, established in 2014, focuses on companies listed in Japan, targeting economic opportunities in the region. On 19th November 2024, the AUM was Rs. 258.99 cr., with an expense ratio of 1.27%. The 5-year CAGR was 6.55%, and the 10-year CAGR stood at 15.67%.
Franklin Asian Equity Fund
Franklin Asian Equity Fund, launched in 2008, invests in equities across Asian markets to capture regional growth trends. As of 19th November 2024, the fund reported an AUM of Rs. 250.36 cr., with an expense ratio of 1.68%. The 5-year CAGR was 4.44%, while the 10-year CAGR stood at 14.73%.
How to Invest in the Best International Mutual Funds in India?
Investing in international mutual funds can be a straightforward process. Here’s a guide to get you started:
- Open a demat/trading/brokerage account. You can open a demat account with smallcase!
- Register online at any AMC website.
- Explore different international or foreign funds to figure out which one suits your investment objectives.
- Investors can use tools like the Tickertape Mutual Fund Screener to sort through these funds and explore their fundamentals and performance in the past.
- Proceed to invest by clicking on the appropriate option and specifying the amount and investment mode (SIP or Lumpsum).
- Submit your KYC details, including your PAN number and bank details, to finalise your investment.
Note: It is important to conduct thorough research and consult a financial advisor before investing in anything.
However, if you’re confused about which stocks to pick, you can explore smallcases:
- smallcases are readymade portfolios of stocks/ETFs, that are based on a theme idea or strategy
- They’re created and managed by SEBI-registered experts
- smallcase.com offers over 200+ stock portfolios, created by 180+ managers
- Some of the popular smallcases among new investors are as follows:
Disclosures for aforementioned smallcases
What are International Mutual Funds?
International mutual funds are mutual funds investing in foreign stocks. These investment vehicles pool investors’ money to collectively invest in a diversified portfolio of securities based outside of India. These overseas funds work in the same way as any other equity mutual fund. They expose investors to a broad spectrum of global financial markets, including stocks, bonds, and other securities. Unlike domestic mutual funds that focus solely on assets within a specific country, international mutual funds aim to capture opportunities and manage risks on a global scale. Investing in global markets that are likely to grow over a long time makes them effective for the future.
How Do Foreign Funds in India Work?
Investing in foreign mutual funds in India functions similarly to investing in regular equity mutual funds. You can invest using INR and receive units in return. The fund manager then allocates this money to stocks of companies listed outside India. To invest in US mutual funds from India or any other international fund, investors can choose a pre-designed global mutual fund in India. These funds follow SEBI regulations to ensure transparency and investor protection.
Types of International Funds
Global Funds: Global mutual fund India schemes invest in securities worldwide, including the investor’s home country. This differs from other international funds in India that exclude the investor’s home country.
Regional Funds: These funds focus on companies within a specific geographical region, providing targeted exposure to a particular area.
Country Funds: Country-specific funds, like US stock mutual funds India, invest only in securities from one country, giving investors exposure to that country’s economy. This type of investment may require thorough research.
Global Sector Funds: These funds focus on specific sectors across various countries, providing global opportunities within industries like technology, healthcare, or finance.
Features of Overseas Mutual Funds
Global Diversification: The best foreign mutual funds in India offer portfolio diversification by spreading investments across different countries and regions. Investing in top 5 global mutual funds India or the best US funds in India helps mitigate the risk associated with economic downturns in one region.
Asset Variety: Foreign mutual funds in India invest in various assets, including international stocks, bonds, and other securities. US stocks mutual funds in India provide exposure to developed and emerging market economies.
Currency Exposure: Investing in international index funds in India or us stocks mutual funds in India involves currency exposure, as returns can be influenced by fluctuations in foreign exchange rates.
Professional Management: Mutual fund foreign investment involves professional management. Fund managers use their expertise to navigate global market trends and identify growth opportunities while managing associated risks.
Liquidity and Redemption: The best international mutual funds India offer liquidity, allowing investors to buy or sell units based on the current Net Asset Value (NAV). US mutual funds India options typically allow for easy redemption of units.
Benefits of Investing in Foreign Mutual Funds
Diversification: Investing in international funds India offers, such as the best international mutual funds in India 2024 or the best US mutual funds in India, helps diversify portfolios and reduce overall risk by investing across different global markets.
Growth Potential: Global mutual fund India investments provide exposure to various industries and economies, which can offer higher growth potential compared to domestic investments.
Hedging Against Inflation: Mutual fund foreign investment can serve as a hedge against domestic inflation. The best international mutual funds India has may outperform local investments during inflationary periods.
What are the Returns on International Mutual Funds & How are they Calculated?
The growth of the top international funds in India has been impressive in recent years. According to the Investment Company Institute (ICI), assets in international mutual funds and ETFs have grown from $2.3 trillion in 2010 to $4.2 trillion in 2023. This represents a Compound Annual Growth Rate (CAGR) of 7.4%.
Furthermore, due to the increasing globalisation of the economy, the returns on international funds have been gaining a lot of attention lately. On average, international funds have yielded annual returns of 10.17% over the past five years. The annualised returns for the 3-year and 10-year periods stand at 6.91% and 7.57%, respectively. Therefore, out of 68 international schemes in the market, 30 schemes offered double-digit returns in this year to date.
Additionally, the returns on international mutual funds India can be calculated in a number of ways. The most common method is to use the Net Asset Value (NAV).
To calculate the return on an international mutual fund, you can use the following formula:
Return = (NAV1 – NAV0) / NAV0
where:
- NAV1 is the NAV of the fund at the end of the period
- NAV0 is the NAV of the fund at the beginning of the period
This formula will give you the total return of the fund, which includes both capital appreciation and income distributions.
How to Choose the Best International Mutual Funds for Investing?
Choosing good international mutual funds for investing may require careful consideration of various factors and thorough research. Here’s a step-by-step guide to can help you make informed decisions:
- Define Your Investment Goals and Risk Tolerance: Investors can clearly define their investment objectives before diving into specific funds, whether long-term growth, income generation, or a combination. They can assess their risk tolerance, considering their ability to withstand potential market fluctuations when considering US stock mutual funds in India.
- Understand Fund Categories and Investment Strategies: International mutual funds, including foreign equity mutual funds, can be categorised. It can be based on investment focus, such as the best global funds in India (investing worldwide), regional funds (focusing on specific regions like Europe or Asia), or country-specific funds. Identify funds that align with your investment goals and risk tolerance.
- Evaluate Fund Performance: Investors can analyse the historical performance of potential funds, including their track record of returns, volatility, and risk-adjusted returns. They can consider metrics like the Sharpe and Sortino ratios to assess their performance relative to market benchmarks and peers.
- Assess Fund Expenses: Mutual funds charge expense ratios covering operating costs and management fees. Lower expense ratios indicate more of your investment goes towards potential returns. Investors can prioritise funds with competitive expense ratios.
- Consider Fund Management and Track Record: Investors can research the fund’s management team, their experience, and investment philosophy. They can assess their track record of managing similar funds and their ability to navigate market cycles.
Who Should Invest in International Mutual Funds?
- Interested in Global Brands: If you’re interested in owning shares of global market leaders like Netflix, you can do so through international funds since these companies aren’t listed on Indian stock exchanges. An international fund allows you to invest in these renowned brands, giving you the opportunity to be part of the profits they generate.
- Exploring Opportunities in Different Markets: Markets can perform differently at various times. While Indian markets may be doing well, others like the US markets might be thriving. By investing in international funds, including Indian mutual funds that invest in US stocks, you can take advantage of opportunities in other markets.
- Long-Term Goals and International Funds: If you’re a long-term investor aiming to build a significant corpus for goals like retirement or your child’s education, an international fund allows you to invest in global assets that can be a helpful tool for achieving these objectives.
Risks Involved While Investing in International Equities Funds
Investing in international equities funds may carry several risks, including:
- Currency: The value of your investment can fluctuate based on changes in exchange rates. For example, if you invest in a fund that holds stocks denominated in euros, and the euro weakens against the US dollar, the value of your investment will decrease.
- Country: Political and economic instability in a country can lead to losses for investors. For example, if a country experiences a civil war or a financial crisis, the value of stocks in that country could plummet.
- Liquidity: Some international markets are less liquid than the US market. This means it can be more difficult to buy and sell securities. This can lead to wider bid-ask spreads and higher transaction costs.
- Company-Specific: Just like domestic stocks, international shares can also be subjected to company-specific risks. These risks can include poor management, product recalls, or legal troubles.
Taxation of International Funds as per the Union Budget of 2024-25
Finance Minister Nirmala Sitharaman announced a reduction in the holding period for equity Funds of Funds (FoFs), overseas FoFs, and gold mutual funds. Let us learn about these changes in detail:
Short-Term Capital Gains (STCG)
The gains from international mutual funds withholding periods under 24 months are classified as short-term capital gains. The previous holding period for STCG was under 36 months. These gains are taxed according to your income tax slab..
Long-Term Capital Gains (LTCG)
The gains from international mutual funds exceeding holding periods of 24 months are now classified as long-term capital gains. Here are a few changes made to the LTCG tax rate and holding period for international mutual funds:
- Holding Period: The holding period for LTCG on international mutual funds was reduced from over 36 months to over 24 months.
- Tax Rate: The long-term capital gains (LTCG) tax rate was reduced to 12.5%, previously taxed at 20%.
Prior to this change, investments in international funds held for less than three years were taxed as short-term gains at the investor’s income tax slab rate, and those held longer were taxed at 20% as long-term gains. With the new rule, investments held for over 24 months will now benefit from the reduced LTCG rate of 12.5%, while those held for less than 24 months will still be taxed as short-term gains at the slab rate.
| Capital Gains Tax | Old Holding Period | New Holding Period | Old Tax Rate | New Tax Rate |
| Short-Term Capital Gains (STCG) | Under 36 months | Under 24 months | Taxed according to your income tax slab. | Taxed according to your income tax slab. |
| Long-Term Capital Gains (LTCG) | Over 36 months | Over 24 months | 20% | 12.5% |
Factors to Consider Before Investing in International Mutual Funds
Here are some key factors to consider before investing in international mutual funds:
- Geographic Diversification: Investors can evaluate the specific regions or countries the fund invests in and assess whether they align with your diversification goals.
- Expense Ratio: Interested investors can consider the fund’s expense ratio, which represents the annual fees charged to manage the fund. Lower expense ratios can positively impact your overall returns.
- Tax Regulation: International investments may be subjected to different tax rules than domestic investments. Investors can consult with a tax advisor to understand the tax implications of investing in international mutual funds.
To Wrap It Up…
International mutual funds offer investors a gateway to the global marketplace, providing a means to diversify their portfolios and potentially benefit from the growth opportunities available worldwide. As financial markets evolve and become more interconnected, international mutual funds’ role may be likely to remain significant. As always, please do your own research and/or consult a financial advisor before investing.
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Frequently Asked Questions About International Mutual Funds
Here are the top 5 global mutual funds on our list, sorted according to their 5-yr CAGR :
(a) ICICI Pru MNC Fund
(b) SBI Magnum Global Fund
( c) ICICI Pru US Bluechip Equity Fund
(d) Nippon India US Equity Opp Fund
(e) UTI MNC Fund
Note: The data on the list has been taken on 19th November 2024.
International mutual funds are usually equity funds. Consequently, experts may recommend a long-term investment horizon of at least 5-7 years.
International mutual funds invest in companies and securities outside of an investor’s home country. This may offer exposure to diverse economies and markets.
Historical returns on international mutual funds are varied. Investors must conduct thorough research into the specific international fund’s historical returns before investing.
Investors interested in international mutual funds should be wary of currency fluctuations and other risks attached to foreign investments. Although international mutual funds can diversify your portfolio by reducing the impact of local market fluctuations offering access to new companies and industries, investors should be wary of the risks associated with them before investing.
The lock-in period for international mutual funds typically ranges from 1 to 3 years. This period restricts withdrawals potentially to discourage short-term trading and encourage long-term investment.
