Investing in mutual funds is a popular way to grow your wealth. A mutual fund is a pool of money collected from various investors, which is then invested in a variety of assets such as stocks, bonds, and other securities. A global mutual fund is a type of mutual fund that invests in companies across the world. In this article, we will discuss the features, risks, and returns of global mutual funds in India.
Features of Global Mutual Funds
Global mutual funds are a type of equity mutual fund that invests in companies across the world. These funds are managed by professional fund managers who have expertise in global markets. Some of the key features of global mutual funds are:
- Diversification: Global mutual funds invest in companies across the world, which helps in diversifying the portfolio. This reduces the risk of investing in a single country or region.
- Professional Management: Global mutual funds are managed by professional fund managers who have expertise in global markets. They analyze the market trends and invest in companies that have the potential to provide good returns.
- Liquidity: Global mutual funds are highly liquid, which means that investors can buy or sell their units at any time. This makes it easy for investors to exit the fund if they need the money.
- Low Minimum Investment: Global mutual funds have a low minimum investment requirement, which makes it accessible to small investors.
Risks of Global Mutual Funds
Like any other investment, global mutual funds also come with certain risks. Some of the key risks of global mutual funds are:
- Market Risk: Global mutual funds are subject to market risk, which means that the value of the fund can go up or down depending on the market conditions.
- Currency Risk: Global mutual funds invest in companies across the world, which means that they are exposed to currency risk. Fluctuations in currency exchange rates can impact the returns of the fund.
- Political Risk: Global mutual funds are also exposed to political risk, which means that changes in government policies or political instability in a country can impact the returns of the fund.
- Management Risk: The performance of a global mutual fund depends on the expertise of the fund manager. If the fund manager makes poor investment decisions, it can impact the returns of the fund.
Returns of Global Mutual Funds
The returns of global mutual funds depend on various factors such as market conditions, currency exchange rates, and the performance of the companies in which the fund has invested. Historically, global mutual funds have provided good returns to investors. For example, the average annual return of the Franklin India Feeder - Franklin US Opportunities Fund (G) over the last 5 years has been around 18%.
How to Invest in Global Mutual Funds in India
Investing in global mutual funds in India is easy. You can invest in these funds through various channels such as online platforms, mutual fund distributors, and directly through the fund house. Here are the steps to invest in global mutual funds:
- Choose a global mutual fund that suits your investment goals and risk appetite.
- Complete the KYC process by submitting your identity and address proof.
- Submit the investment amount and the investment form to the mutual fund distributor or the fund house.
- The units will be allotted to you based on the prevailing Net Asset Value (NAV) of the fund.
Conclusion
Global mutual funds are a good investment option for investors who want to diversify their portfolio and invest in companies across the world. These funds come with certain risks, but they have the potential to provide good returns in the long run. As with any investment, it is important to do your research and choose a fund that suits your investment goals and risk appetite.
