Investing in international funds helps reduce portfolio volatility: Experts

In the past three months, both the Sensex and the broad-based BSE 500 index have gained 8 per cent each. However, this performance pales in comparison to China and the US, the world’s two biggest markets.

China’s broad-market CSI300 Index has gained 22 per cent in three months, while the US' S&P500 index and Nasdaq Composite have gained 10 per cent and 13 per cent, respectively. Not surprising then that mutual fund (MF) schemes investing in global equities have performed well this year.

There are about three dozen international funds offered by domestic MFs with assets under management (AUM) of nearly Rs 3,000 crore. Most of these schemes have performed in 2019. The table lists best-performing schemes in the international fund category for the past three-months.

Edelweiss Greater China Equity and Motilal Oswal Nasdaq 100 ETF have delivered best returns in the category with returns of 19.1 and 14.3 per cent, respectively. Franklin India Feeder (US Opportunities Fund), Sundaram World Brand Fund and HSBC Global Consumer Opportunities Fund (Benefiting from China Growing Consumption Power) are in the top five.

Industry players say increasingly more investors are warming up to investing in international funds as a tool for portfolio diversification. Investing in such funds helps reduce portfolio volatility and acts as a hedge during times of rupee depreciation, say experts.