Top MNC Funds to Invest in: Best MNC Mutual Funds in India (2024)
MNC funds invest in multinational corporations, generating substantial revenue from both domestic and international operations. Their scale advantage allows for profitable exports to various countries. These funds often include top-ranking companies, leveraging their broad geographic presence and strong brand recognition for market dominance and superior performance across market cycles. This article highlights the top MNC Funds in India for 2024 and discusses key considerations for potential investors.
List of Top MNC Funds to Invest in for 2024
Here is a list of the top MNC mutual funds to invest in for 2024:
| Fund Name | AUM | 3Y CAGR (%) | 5Y CAGR (%) | Absolute Returns- 1Y (%) |
|---|---|---|---|---|
| ICICI Pru MNC Fund | ₹ 1,831.22 | 19.44 | 25.60 | 33.03 |
| SBI Magnum Global Fund | ₹ 6,685.65 | 11.75 | 19.02 | 12.81 |
| UTI MNC Fund | ₹ 3,206.20 | 16.22 | 18.45 | 33.55 |
| Aditya Birla SL MNC Fund | ₹ 4,124.16 | 12.92 | 15.35 | 33.72 |
| HDFC MNC Fund | ₹ 637.21 | - | - | 29.25 |
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 14th August, 2024. This data is derived from the Tickertape Mutual Funds Screener.
🚀 Pro Tip: You can use Tickertape’s Mutual Fund Screener to research and evaluate funds with over 50+ pre-loaded filters and parameters.
Top MNC Funds: An Overview
Here are brief overviews of the top MNC Funds listed above:
ICICI Prudential MNC Fund
The ICICI Prudential MNC Fund is a thematic MNC mutual fund scheme by ICICI Prudential Mutual Fund. It was launched on 29th May 2019 and has been operational for four years and nine months. As of 14 August 2024, the fund’s AUM is Rs. 1,831.22 cr., positioning it as a medium-sized fund within its category. Its expense ratio stands at 1.00%, lower than that of many other thematic-MNC funds.
SBI Magnum Global Fund
SBI Magnum Global Fund is a thematic MNC mutual fund scheme by SBI Mutual Fund. It was launched on January 1st, 2013, and has been operational for over 11 years. As of 14th August 2024, it manages assets worth Rs. 6,685.65 cr., positioning it as a medium-sized fund within its category. With an expense ratio of 1.18%, it closely aligns with the industry standard for similar thematic MNC funds.
UTI MNC Fund
The UTI MNC Fund is a thematic MNC mutual fund. As of 14th August 2024, it holds assets under management (AUM) worth Rs. 3,206.20 cr., and the NAV of UTI MNC fund is 442.06, placing it as a medium-sized fund in its category. It has an expense ratio of 1.17%, similar to other thematic MNC funds. This maintains a competitive cost structure.
Aditya Birla Sun Life MNC Fund
Aditya Birla Sun Life MNC Fund is a thematic MNC mutual fund scheme by Aditya Birla Sun Life Mutual Fund. As of 14th August 2024, it manages assets worth Rs. 4,124.16 cr., positioning it as a medium-sized fund in its category. The fund maintains an expense ratio of 1.26%, aligning closely with the expense ratios of other thematic MNC funds.
HDFC MNC Fund
The HDFC MNC Fund is a thematic MNC mutual fund by HDFC Mutual Fund. It has assets under management (AUM) of Rs. 637.21 cr., as of 14th August 2024, and falls into the medium-sized category within its class. Its expense ratio stands at 1.21%, aligning closely with the industry average of thematic MNC funds.
How to Invest in MNC Funds?
Investing in MNC mutual funds can be a straightforward process. Here’s a guide to get you started:
- Open a demat/trading/brokerage account. Investors can open a demat account with smallcase!
- Register online at any AMC website.
- Explore different MNC 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
Features of MNC Mutual Funds
When considering MNC (Multinational Corporation) Mutual Funds, investors are drawn to certain key features that distinguish them from other types of mutual funds. Here are some notable features:
- Global Exposure: Multinational company mutual funds provide investors with exposure to multinational companies operating across various countries and industries. This global diversification helps mitigate risks associated with regional economic downturns or industry-specific challenges.
- Diverse Portfolio: These funds typically invest in a diversified portfolio of multinational companies spanning sectors such as technology, healthcare, consumer goods, and finance. This diversification helps spread risk and capture opportunities across different markets and industries.
- Professional Management: MNC Mutual Funds are managed by experienced fund managers who specialise in selecting and managing investments in multinational corporations. Their expertise and research capabilities enable them to identify promising opportunities and navigate complex global markets.
- Currency Exposure: Since MNC companies listed in India operate in different countries, multinational mutual funds may be exposed to various currencies. This currency diversification can act as a hedge against currency fluctuations and provide potential opportunities for currency appreciation.
Why Invest in MNC Funds?
Investing in MNC (Multinational Corporation) funds offers investors exposure to a diverse range of multinational companies with a global presence. These funds typically invest in companies with strong fundamentals, established business models, and a track record of success across various geographies. By investing in MNC funds, investors can diversify their portfolios and potentially benefit from the growth prospects of multinational companies operating in different sectors and regions. Additionally, MNC funds may offer opportunities for capital appreciation and income generation through dividends, making them an attractive option for investors seeking long-term growth and stability in their investment portfolios.
Who Should Invest in MNC Funds?
MNC mutual funds focus on theme-based equity investments, primarily in multinational corporations. These funds, managed by professionals, seek out promising MNCs for their portfolios. They aim for long-term capital growth over a minimum five-year period.
By concentrating on multinational companies, these funds inherently carry higher risk due to the theme’s specificity. The portfolio’s diversity within the theme helps mitigate some of this risk.
However, they pose considerable risks since fund managers select from a limited pool of stocks, and multinational company mutual funds are sensitive to economic and political fluctuations. It’s not recommended to allocate significant investments to these funds unless you’re confident in the MNC theme. Otherwise, diversifying across various mutual funds is a wiser strategy for most investors.
How to Choose the Best MNC Funds for Investment?
When selecting the optimal MNC mutual funds, consider these key factors:
- Investment Objectives: Ensure the fund’s goals match yours, as any misalignment could impact outcomes. Analyse if the fund’s theme and long-term horizon sync with your investment objectives.
- Investment Risk: Recognise the inherent risks associated with multinational funds due to their reliance on global economic factors. Evaluate portfolio holdings to gauge alignment with your risk tolerance and investment goals.
- Returns: While past performance isn’t indicative of future results, analysing historical returns helps understand a fund’s stability. Compare returns against benchmarks and peers to assess performance consistency.
- Performance Ratios: Utilize performance ratios such as standard deviation, beta, and Sharpe ratio to assess a fund’s performance and volatility relative to its benchmark.
- Expense Ratio: Factor in the expense ratio, which impacts overall returns. Opt for funds with lower expense ratios to maximise potential returns from your investments.
How to Calculate Mutual Fund Returns?
Calculating mutual fund returns is essential for investors to assess the performance of their investments accurately. Here’s a step-by-step guide on how to calculate mutual fund returns:
- Gather Necessary Information: Collect all relevant information about your mutual fund investment, including the initial investment amount, the current value of the investment, and any additional contributions or withdrawals made during the investment period.
- Determine Investment Period: Determine the time period for which you want to calculate the returns. This could be for a specific year, quarter, or since the inception of the investment.
- Calculate Total Returns: Subtract the initial investment amount from the current value of the investment to find the total returns. If there have been additional contributions or withdrawals, adjust the calculation accordingly.
- Calculate Percentage Returns: Divide the total returns by the initial investment amount and multiply by 100 to calculate the percentage returns. This will give you the overall return percentage for your mutual fund investment.
- Consider Dividends and Distributions: If your mutual fund has paid out dividends or distributions during the investment period, add these amounts to the total returns before calculating the percentage returns.
- Factor in Expenses: Remember to consider any fees or expenses associated with your mutual fund investment, as these can impact the overall returns. Subtract these expenses from the total returns to get the net returns.
- Compare Returns: Once you have calculated the returns, compare them with relevant benchmarks or other investment options to evaluate the performance of your mutual fund investment.
Taxation on MNC Mutual Funds as per the Union Budget 2024-25
MNC mutual funds are usually equity funds and are taxed accordingly. Being aware of these tax implications is essential for making informed financial decisions. The Union Budget for 2024-25 has made significant changes to the taxation on equity mutual funds. Here we have listed these changes, along with the revised tax rates for equity mutual funds:
Short-Term Capital Gains Tax
Any gains made when holding equity mutual funds for less than 12 months are considered short-term capital gains. The Union Budget 2024-25 increased the tax rate on these gains to 20%. The STCG tax rate was previously 15%.
Long-Term Capital Gains Tax
For equity mutual funds held for over a year, gains are classified as long-term capital gains. The new budget introduces these key changes:
- Tax-Free Limit: The capital gains up to Rs. 1.25 lakh per year are tax-free. This is an increase from the previous limit of Rs. 1 lakh.
- Tax Rate: The gains exceeding Rs. 1.25 lakh are now taxed at a flat rate of 12.5%. This is an increase from the previous rate of 10%.
- Indexation: The benefit of indexation, which allowed investors to adjust the purchase price for inflation, has been removed for all asset classes, including equity mutual funds.
Indexation was a method that allowed investors to adjust the purchase price of assets for inflation. This adjustment reduced taxable profits when selling assets like property or gold. Previously, these long-term capital gains were taxed at 20%. The new rule imposes a flat 12.5% tax on all long-term capital gains but eliminates any indexation benefits.
| Capital Gains Tax | Holding Period | Old Rate | New Rate |
| Short-Term Capital Gains (STCG) | Less than 12 months | 15% | 20% |
| Long-Term Capital Gains (LTCG) | More than 12 months | 10% | 12.50% |
Benefits of Investing in MNC Funds
There are a few benefits of Investing in MNC Funds, and they have been listed below:
- Selective Portfolio Sectors: Multinational funds focus on specific sectors, which allows investors to hone in on the potential growth of multinational companies (MNCs). While this targeted approach may limit diversification, it offers a concentrated strategy to capitalise on the strengths and opportunities within chosen sectors.
- Competitive Advantage of MNCs: The best MNCs in India often possess a competitive edge over their domestic counterparts. Their global presence, established brands, and robust research and development capabilities position them favourably in the market. Investing in MNC funds can potentially leverage this advantage to enhance their portfolio’s overall performance.
- Diversification and Risk Reduction: Investing in MNC funds allows portfolio diversification, which can lower the overall risk and volatility. These funds invest in sectors spanning across healthcare, technology, energy and consumer goods. This diversification can be particularly valuable during market uncertainty, offering investors a cushion against sudden downturns and market fluctuations.
Challenges of Investing in MNC Funds
When considering investing in MNC (Multinational Corporation) funds, investors should be mindful of several challenges:
- Currency Risk: MNC funds often have exposure to multiple currencies due to their global operations. Fluctuations in exchange rates can impact the value of investments and potentially reduce returns for investors. Managing currency risk requires careful monitoring and hedging strategies to mitigate adverse effects.
- Regulatory and Political Risks: MNCs operate in various countries, each with its own regulatory environment and political landscape. Changes in regulations or government policies can affect MNCs’ business operations and financial performance, leading to uncertainties for investors. Staying informed about geopolitical developments and assessing regulatory risks is essential for managing investments in MNC funds.
- Potential for Slower Growth: MNCs may already have established market presence in mature economies, limiting their growth potential compared to domestic-focused companies. As a result, MNC funds may experience slower growth rates, affecting their overall performance relative to other investment options. Investors should consider the growth prospects of these companies in their investment strategy and adjust their expectations accordingly.
- Higher Expense Ratios: MNC funds may have higher expense ratios compared to domestic funds, primarily due to the costs associated with global operations and currency management. These higher expenses can erode returns over time and impact the overall profitability of investments in MNC funds. Investors should carefully evaluate the expense ratios of MNC funds and assess their cost-effectiveness relative to potential returns.
Factors to Consider Before Investing in MNC Funds
Here are a few key factors to consider when investing in MNC Funds:
- Economic and Political Risks: MNC mutual funds are exposed to risks from economic and political instability due to the global nature of the companies involved. Political events, such as unstable governments or conflicts, can harm a company’s performance. Economic issues like slowdowns or trade tensions can also impact profitability and operations.
- Risk of Overlapping Investments: Investing in MNC funds may result in overlapping investments if you already hold diversified equity funds. This overlap occurs when the same stocks appear in both portfolios, making additional investment in MNC funds potentially redundant.
- Limited Investment Choices: MNC funds often struggle with a limited number of multinational companies compared to domestic firms. These funds may be more suitable during market downturns, but in strong markets, investors might prefer mid-cap or small-cap stocks for better returns.
- Elevated Valuation: MNC funds typically have higher valuations due to the extensive global presence of the companies involved. This can make them less attractive to smaller investors. However, they remain appealing through systematic investment plans (SIPs) and for long-term holding periods, usually spanning 3-5 years.
- Impact of High Royalty Fees: High royalty payments from parent companies to subsidiaries can affect short-term earnings. Despite this, the overall high sales figures of these companies generally mitigate the impact on the fund’s performance.
To Wrap It Up…
In conclusion, investing in MNC mutual funds can offer investors exposure to a diverse range of multinational corporations with strong global presence and proven track records of performance. These funds provide a convenient way to access opportunities in international markets while diversifying investment portfolios. With the potential for steady growth and stability, MNC mutual funds can be a valuable addition to a well-rounded investment strategy, helping investors achieve their financial goals over the long term.
Most Popular Mutual Funds:
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Frequently Asked Questions(FAQs) on MNC Funds
MNC mutual funds primarily invest in MNC stocks in India, offering broader diversification compared to sector-specific funds. These funds focus on the MNC theme, which includes global corporations with subsidiaries in India from various countries such as the United States, United Kingdom, South Korea, Japan, Germany, and France.
The full form of MNC Funds is Multinational Mutual Funds. These funds primarily invest in Multinational companies.
The Union Budget 2024-25 increased the tax rate on short-term capital gains to 20%. The STCG tax rate was previously 15%. The LTCG tax rate was also increased from 10% to 12.5%.
MNC mutual funds can pose high risks due to their focused investment approach. Unlike diversified funds, which spread investments across various sectors, MNC funds concentrate solely on a specific theme. Consequently, the risk level surpasses that of large-cap or diversified funds.
Thematic MNC funds carry specific risks that investors should consider. Market risks stem from declines in market conditions, while concentration risk is higher because these funds focus on a single theme. Although these funds can deliver high returns with strong performance, they also face volatility risk, which can cause sudden drops in investment value due to price fluctuations in the shares.
