Investing in International Mutual Funds

byDilip PrasadLast Updated: April 19, 2024
Investing in International Mutual Funds

International mutual funds are investment vehicles that allow individuals to invest their money in companies and assets located outside their home country. These funds provide a unique opportunity to diversify one’s investment portfolio and potentially benefit from the growth of global markets.

In this blog, we will explore the benefits and risks associated with international mutual funds, discuss the different types of funds available, and provide some tips on how to choose the right fund for your investment goals.

What Are International Mutual Funds?

International mutual funds are investment options that allow people to invest in companies and assets from different countries. These funds help diversify investments and potentially earn money from global markets. Professional managers handle these funds and make investment decisions based on research. However, investing in international mutual funds involves risks like currency fluctuations and political instability. Overall, they provide an easy way to invest in global markets and expand investment portfolios.

Types of International Mutual Funds

  • Global Funds: These funds invest in companies and assets worldwide, without any specific regional focus. They provide broad exposure to global markets and are suitable for investors looking for diversified international investments.
  • Country-Specific Funds: These funds concentrate their investments in a single country. They are ideal for investors who want to focus on the growth potential of a particular country or have specific knowledge or interest in a specific market.
  • Regional Funds: These funds focus on specific regions, such as Europe, Asia, or Latin America. They invest in companies and assets located within that region, allowing investors to target specific geographical areas and take advantage of regional growth opportunities.

Advantages of Investing in International Funds

Investing in overseas mutual funds or international funds has several advantages:

  • Diversification: International funds allow investors to spread their investments across different countries and industries, reducing risk by not relying solely on one market.
  • Global Opportunities: Investing internationally provides access to economies and companies with growth potential that may not be available in the domestic market.
  • Enhanced Performance: By capitalizing on global market trends and opportunities, international funds have the potential to enhance portfolio performance.
  • Currency Diversification: Investing in foreign currencies can provide a hedge against currency fluctuations and potentially enhance returns.
  • Expert Management: International funds are managed by professionals who specialize in global markets, increasing the likelihood of making informed investment decisions.

How Do Foreign Mutual Funds Work?

International mutual funds work by pooling money from multiple investors and using that capital to invest in a diversified portfolio of assets located outside the investors’ home country. Professional fund managers make investment decisions on behalf of the investors, selecting stocks, bonds, or other assets from companies and countries around the world. The goal is to maximize returns while managing risk through diversification. As the value of the investments in the fund fluctuates, the value of the mutual fund shares may increase or decrease, providing potential returns for investors. 

However, it’s important to be aware of the risks associated with investing in international markets, such as currency fluctuations and political instability. It’s advisable to carefully consider investment goals and consult with financial professionals before investing in international mutual funds.

Who Should Invest In  International Mutual Funds?

International mutual funds can be suitable for investors who want to diversify their portfolios, seek global investment opportunities, have a long-term investment horizon, are comfortable with higher risk levels, or want to diversify their currency exposure. Investors need to consider their own goals, risk tolerance, and consult with financial advisors before investing in international mutual funds.

6 Points to Keep in Mind Before Investing in International Mutual Funds

  • Risk: International markets can be more unpredictable, so be aware of the potential risks.
  • Currency Impact: Currency fluctuations can affect your returns, so consider how this may impact your investments.
  • Research: Look into the fund’s strategy, performance, and the experience of the fund manager. Choose funds with good performance and reasonable fees.
  • Diversification: Ensure the international fund helps diversify your investments across different regions, industries, and asset types.
  • Time Horizon: Consider how long you plan to invest. International funds are often better for long-term investors.
  • Seek Advice: Talk to a financial advisor who can provide personalized guidance based on your situation.

In conclusion, investing in international mutual funds offers both risks and rewards. On the one hand, it provides geographical diversification, allowing investors to spread their risk across different countries and regions. This can help offset potential losses if one market underperforms. On the other hand, investing in international funds comes with the risk of currency volatility and exposure to different market conditions and regulations. It is important for investors to carefully evaluate the potential rewards and risks before investing in international mutual funds, and consider their own risk tolerance and investment goals.

Disclaimer: Nothing on this blog constitutes investment advice, performance data or any recommendation that any security, portfolio of securities, investment product, transaction or investment strategy is suitable for any specific person. You should not use this blog to make financial decisions. We highly recommend you seek professional advice from someone who is authorised to provide investment advice.


What is an international mutual fund?

International mutual funds are investment funds that focus on companies outside the investor's home country. They provide exposure to global markets and may include specific segments like the BRICS nations.

How can I buy international mutual funds in India?

Investing in international mutual funds in India is similar to investing in any other mutual fund scheme. Investors can purchase units based on the amount they invest and the fund's net asset value (NAV) at the time of purchase.

Is it good to invest in international mutual funds?

Investing in international mutual funds offers the advantage of geographical diversification. By investing in companies from different countries and regions, you can spread your risk. If one country's economy is underperforming, investments in other areas may help mitigate potential losses.

Can I buy foreign mutual funds?

Yes, international mutual funds allow investors from a particular country to invest in overseas markets. These funds primarily invest in stocks of companies listed outside the investor's home country. Investing in foreign mutual funds provides a convenient way to access the global stock market.

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