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31 JANUARY, 2023
Investment in International mutual funds is a great way to diversify your portfolio and reap benefits of global markets.
“Never invest in a business you can’t understand” – Warren Buffett
Arvind Iyer, 28, and his group of 10 friends were meeting on a Zoom call. He was on a Dell laptop, and they were discussing the latest shows they watched on Netflix and Amazon Prime. He spoke about how his delivery of Nike shoes from Walmart-Flipkart had come earlier than expected. Someone on the group said that she won an online game with her cousins in the US and was waiting for her winnings via PayPal. One person said she has to turn in early because she had a call with the heads of her agency based out of New York. A couple of guys on the call were giving suggestions to each other for the perfect Tinder meeting when they called it a night.
This is a common setting among friends and families these days. People coming together online and talking about their lives in a virtual world. And, the companies that help them get through it. Noticed the brand names in the story? All of them are familiar to Indians like Arvind. These are businesses that all of them use day in and day out, and understand very well.
On the TV show Billions, there’s a line that the protagonist Bobby Axelrod says, “Whenever you can, put a company in your mouth.” He’s talking about investing in a company that makes chocolates and biscuits but what he means is that if one is thinking about investing in a company, you should know the ins and outs of the business.
Most Indian millennials who are of Arvind’s age know these US brands inside and out, but aren’t able to invest in them because they are not listed on Indian stock markets.
Companies like Apple, Amazon, Netflix, Zoom, Match Group (Tinder) etc. are companies that will play an increasingly important role in the lives of Indian millennials and it might be a good idea for them to invest in these companies through international mutual funds.
Apart from understanding companies, there are four other reasons to invest in international funds:
Currently the performance of some of the recommended globally diversified international funds at Kotak include:
Franklin India Feeder - Franklin U.S. Opportunities Fund
Invesco Global Consumer Trends^
(Invesco India - Invesco Global Consumer Trends FoF)
Wellington Global Innovation Fund^
(Kotak Global Innovation Fund of Fund)
Source: MFI Explorer | Data as on 31st January, 2023 | ^Underlying fund returns are calculated by converting USD to INR using RBI reference rates | *Underlying fund’s launch date
Investing into international mutual funds may be a great option, but millennials like Arvind should be mindful that we at Kotak recommend investing up to 20% of one’s equity portfolio in international equities. Further, it is preferable to choose globally diversified funds rather than a single country focused funds. However, before investing, be sure to check your risk profile for suitability for the respective funds.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Kotak Mahindra Bank Ltd., AMFI registered Mutual Fund distributor. AMFI Registration Number (ARN) 1390.
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