Top International Mutual Funds to Invest Online 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. Belonging to the best Global Mutual Fund category, these funds add another layer of geographic diversification in Mutual Fund types.

Therefore, in this blog, we will understand the international mutual funds meaning, types, advantages, features, and more. Let’s begin.

What are International Mutual Funds?

International mutual funds mean 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. It exposes 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. Additionally, they let investors invest in different markets, industries, and areas of risk.

List of the Best International Mutual Funds in India 2024

Here is a list of the best international funds in India that you might consider investing in.

Fund Name	AUM (in Cr)	Expense Ratio	1Y Return	3Y CAGR	5Y CAGR
Motilal Oswal Nasdaq 100 FOF	₹4,612.29	0.19	50.49%	16.41%	24.31%
PGIM India Global Equity Opp Fund	₹1,438.56	1.43	47.35%	8.69%	18.77%
Franklin India Feeder-Franklin U.S. Opportunities Fund	₹3,327.11	0.52	48.59%	11.49%	18.19%
DSP US Flexible Equity Fund	₹834.81	1.50	24.18%	14.16%	17.70%
Invesco India - Invesco Global Equity Income FoF	₹19.97	0.91	24.21%	14.43%	14.35%
Edelweiss US Technology Equity FOF	₹96.73	1.42	13.41%	13.47%	14.24%
Aditya Birla Sun Life Global Excellence Equity Fund	₹271.09	0.58	21.69%	10.19%	13.75%
DSP World Mining Fund	₹140.03	1.51	10.95%	4.81%	13.36%
Sundaram Global Brand Fund	₹1,18.81	1.26	26.46%	11.95%	13.13%
HDFC Developed World Indexes	₹1,176	0.28	29.59%	10.28%	10.28%

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 top international mutual funds in India in the list is from 15th March, 2024.  However, for real-time updates on stock prices and market trends, visit the smallcase stocks collection today!

Top 10 US Mutual Funds in India Overview

Let’s have a look at the US equity funds that you can consider investing in 2024.

Motilal Oswal Nasdaq 100 FOF

Motilal Oswal Nasdaq 100 FOF Direct – Growth is a type of investment fund offered by Motilal Oswal Mutual Fund that invests internationally. It’s been around for 5 years and 4 months since its launch on 9th November, 2018. It manages assets worth ₹4,612 Crores and is considered medium-sized compared to others like it. It has a low expense ratio of 0.19%, which means it charges less compared to many other similar international funds.

PGIM India Global Equity Opp Fund

The PGIM India Global Equity Opportunities Fund Direct-Growth is a type of investment where many people pool their money together to buy stocks from companies worldwide. It’s managed by a company called PGIM India Mutual Fund. This fund has been around for 11 years and 2 months, starting on 1st January, 2013. The AUM of this fund is ₹1,361 Crores and is a mid-size fund compared to other similar funds. However, it charges an expense ratio of 1.43%.

Franklin India Feeder-Franklin U.S. Opportunities Fund

Franklin India Feeder Franklin US Opportunities Direct Fund-Growth is a type of investment plan offered by Franklin Templeton Mutual Fund. It has been around for 11 years and 2 months, starting from 1st January, 2013. This fund currently manages assets worth ₹3,327 Crores and is considered to be mid-size compared to similar funds. It charges a fee, known as the expense ratio, which is relatively low at 0.52%, making it cost-effective compared to many other international funds.

DSP US Flexible Equity Fund

DSP US Flexible Equity Direct Plan-Growth is a type of investment fund offered by DSP Mutual Fund. It started on 1 January, 2013 and has been around for 11 years and 2 months. It’s not too big or too small; it’s sort of in the middle. However, it has a higher expense ratio of 1.5% compared to many similar funds.

Invesco India – Invesco Global Equity Income FoF

Invesco India’s Global Equity Income Fund is a type of mutual fund. It’s been around for almost 10 years, starting on April 15, 2014. The fund currently manages around ₹19 Crores in assets. It’s considered a small-sized fund among others like it. However, it has a relatively high expense ratio of 0.91%, compared to similar international funds.

Edelweiss US Technology Equity FOF

Edelweiss US Technology Equity FoF Direct-Growth is a type of investment fund offered by Edelweiss Mutual Fund. It’s been around for 4 years since its launch on 31st December, 2023. This fund holds assets worth ₹97 Crores, making it a small-sized fund. However, it’s important to note that it has a relatively high expense ratio of 1.42%, compared to many other similar international funds.

Aditya Birla Sun Life Global Excellence Equity Fund

Aditya Birla Sun Life Global Excellence Equity FoF Direct-Growth is a type of mutual fund from Aditya Birla Sun Life Mutual Fund that invests internationally. It’s been around for 11 years and 2 months since it started on 1st January, 2013. The fund currently manages assets worth ₹174 Crores, making it a small-size fund in its category. Its expense ratio, which is 0.68%, is similar to what most other international funds charge.

DSP World Mining Fund

DSP World Mining Fund Direct Plan-Growth is a type of investment offered by Dsp Mutual Fund. It’s been around for about 11 years and 2 months since it started on 1st January, 2013. This fund has an AUM of about ₹151 Crores and it’s considered a small-size fund compared to others like it. However, it’s important to note that it has a relatively higher expense ratio of 1.51% compared to similar international funds.

Sundaram Global Brand Fund

Sundaram Global Brand Direct-Growth is an international investment plan from Sundaram Mutual Fund. It’s been around for over 11 years, starting on January 1st, 2013. This fund’s AUM is about ₹115 Crores and is considered a small-size fund in its category. The fee for managing this fund, called the expense ratio, is 1.26%, which is a bit higher compared to similar international funds.

HDFC Developed World Indexes

HDFC Developed World Indexes FoF Direct-Growth is a type of global investment fund offered by Hdfc Mutual Fund. It’s been around for 2 years and 5 months since it started on 17th September, 2021. This fund’s AUM is ₹1,157 Crores and is a mid-size fund in its category. Interestingly, it charges a lower expense ratio of 0.28% compared to many other similar international funds.

How Do Foreign Mutual Funds in India Work?

Investing in the best international mutual fund in India is like investing in regular equity mutual funds. You can use rupees to invest, and in return, you get units of the funds. The fund manager takes this money and invests it in stocks of companies listed outside India. Now, you can easily invest in international mutual funds in two ways that have been listed below:

• You can directly purchase stocks of companies to build a diversified portfolio.
• You can also invest in an existing global fund that already has a pre-designed portfolio. 

Regardless of the method you choose, Indian mutual fund companies oversee these investments. Just like all mutual funds, they follow regulations set by the Securities Exchange Board of India (SEBI).

Types of International Funds

The types of the best mutual funds to invest in US stocks are as follows:

• Global Funds: Although their names may sound interchangeable, it’s essential to differentiate between international funds and global funds. Global Funds invest in securities worldwide, including the investor’s home country. Conversely, International Funds invest in securities globally, excluding the investor’s home country.
• Regional Funds: As implied by their name, regional funds concentrate on companies within a specific geographical area anywhere globally.
• Country Funds: Country Funds exclusively invest in securities from a single foreign country, exposing investors to that country’s economy. However, investing in these funds requires thorough research.
• Global Sector Funds: Global Sector Funds target companies within a particular sector across various countries worldwide. These funds prioritize gaining exposure to specific sectors.

Features of Overseas Mutual Funds

Overseas mutual funds, also known as international or global mutual funds in India, come with several distinctive features:

• Global Diversification: Overseas mutual funds provide investors with the opportunity to diversify their portfolios across different countries and regions. This diversification helps spread risk and reduce the impact of economic downturns in a specific country.
• Asset Variety: These funds invest in a range of assets such as international stocks, bonds, and other securities. The portfolio may include a mix of developed and emerging market assets, offering investors exposure to various global economic conditions.

• Currency Exposure: Investing in overseas mutual funds exposes investors to currency fluctuations. Since these funds deal with assets denominated in foreign currencies, exchange rate changes can impact investors’ overall returns.
• Professional Management: Fund managers with expertise in international markets make investment decisions on behalf of investors. Their goal is navigating and investing in global market trends, identifying growth opportunities, and managing risks associated with different regions and industries.
• Liquidity and Redemption: Overseas mutual funds typically offer liquidity to investors, allowing them to buy or sell units based on the prevailing Net Asset Value (NAV). Investors can redeem their units and receive the corresponding value, subject to applicable exit loads.

Who Should Invest in International Mutual Funds?

Here is a list of investors interested in investing in international mutual funds.

• For Investors New to Mutual Funds: If you’re starting with mutual fund investments, it’s advisable to take your time with international funds. Instead, focus on building a diverse portfolio of Indian companies.

• 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. Investing in international funds allows you to be part of the profits these well-known brands 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, 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, international funds can be a helpful tool. To make the most of international funds, it’s advisable to have an investment horizon of at least 5 years.

Factors to Consider Before Investing in International Mutual Funds

Investing in international mutual funds can offer diversification benefits and exposure to potential growth opportunities in different parts of the world. However, it’s crucial to carefully consider the risks and complexities involved before making an investment decision. Here are some key factors to consider before investing in international mutual funds:

• Understand Investment Objectives and Risk Tolerance: US mutual funds India can potentially enhance returns but may also carry higher volatility due to factors like currency fluctuations and geopolitical events. 
• Figure Out Your Investment Horizon: International funds can often be considered suitable for long-term investments, as they aim to capture growth opportunities over an extended period. 
• Geographic Diversification: Evaluate the specific regions or countries the fund invests in and assess whether they align with your diversification goals.
• Currency Risk: Fluctuations in exchange rates can significantly impact the returns of international investments. Understand the currency exposure of the best US mutual fund in India and how it might affect your portfolio’s overall performance.
• Political and Economic Risks: Political stability and economic conditions in the countries where the fund invests can influence its performance. Research the political and economic environments of the target regions to assess potential risks.
• Fund Management and Track Record: Evaluate the best Indian mutual funds investing in US stocks management team, their investment philosophy, and track record. Assess the fund’s performance over different market cycles and compare it to relevant benchmarks.
• Expense Ratio: 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. Consult with a tax advisor to understand the tax implications of investing in international mutual funds.

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:

• Begin by registering online.
• Navigate to the Mutual Funds section and select the international fund you wish to invest in.
• 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 finalize your investment.

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,  the US stock mutual funds India can also be subjected to company-specific risks. Such as poor management, product recalls, or legal troubles.

Benefits of Investing in Foreign Mutual Funds India

Despite these risks, international equity funds can offer several potential benefits, including:

• Diversification: Investing in foreign equity mutual funds can help to diversify your portfolio and reduce overall risk. This is because international markets are not perfectly correlated with the US market.
• Growth Potential: International markets can offer exposure to different industries and economies, providing opportunities for higher growth in global mutual funds in India.

• Hedging Against Inflation: International stock mutual funds can help hedge against inflation. This is because they tend to outperform domestic stocks during periods of high inflation.

How to Choose the Best International Mutual Funds for Investing?

Choosing good international mutual funds for investing requires careful consideration of various factors and thorough research. Here’s a step-by-step guide to help you make informed decisions:

• Define Your Investment Goals and Risk Tolerance: Clearly define your investment objectives before diving into specific funds, whether long-term growth, income generation, or a combination. Assess your risk tolerance, considering your ability to withstand potential market fluctuations.

• Understand Fund Categories and Investment Strategies: International mutual funds can be categorized. 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: Analyze the historical performance of potential funds, including their track record of returns, volatility, and risk-adjusted returns. 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. Prioritize funds with competitive expense ratios.

• Review Fund Holdings and Diversification: Examine the fund’s portfolio holdings to understand its sector and industry allocations. Ensure diversification across various sectors and industries to reduce exposure to specific risks.

• Consider Fund Management and Track Record: Research the fund’s management team, their experience, and investment philosophy. Assess their track record of managing similar funds and their ability to navigate market cycles.

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 globalization of the economy, the returns on international funds have been gaining a lot of attention lately. On average, International Funds yielded annual returns of 10.17% over the past five years. The annualized 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). The NAV is the price per share of a mutual fund, and it is calculated by dividing the fund’s total assets by the number of shares outstanding.

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.

Taxability on International Mutual Funds 

While international mutual funds primarily invest in equities, their taxation deviates from the norm of other equity mutual funds in India. Contrary to the expected equity taxation, returns from international funds follow a taxation structure akin to debt funds.

• Short-Term Capital Gains (STCG):  If you redeem your international fund investment within three years, it qualifies as a short-term capital gain. These gains are added to your income and subjected to taxation based on the applicable income tax bracket. 
• Long-Term Capital Gains (LTCG):  If you redeem your mutual fund after three or more years, the returns fall into the long-term capital gains category. These gains are taxed at a flat rate of 20% after factoring in indexation, which involves adjusting returns against inflation.

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 will likely remain significant.

As always, please do your own research and/or consult a financial advisor before investing.

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