What are Global Mutual Funds and How to Invest in Them?
The front page of India’s publication houses are regularly splashed with news of major milestones achieved by the new age-global companies such as Tesla, Apple, Facebook, Netflix, and many more; these companies achieve a major milestone, either in terms of market capitalization or any path-breaking disruptions planned by them which could sustain their exponential revenue growth.
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For instance, the premium electric vehicle maker, Tesla, whose car sales volume is less than half a million but it has become the largest car-maker by market value, has overtaken the giant incumbents like Toyota Motor Corporation, which has been in business for nearly nine decades and sells about 10 million cars a year.
The stories of new-age companies may be an inspiration for potential entrepreneurs, but a stratospheric rise in stock prices makes an Indian investor imbued with the feeling of ‘Fear of Missing Out (FOMO), given the presence of Indian companies being close to nil in emerging sectors such as cloud computing, digital platform, e-commerce, artificial intelligence or driverless cars.
So, what is the solution for Indian investors who want to participate in the growth story of new-age global companies? The search for the most viable and tax-efficient way to benefit from the international equities ends with the international funds offered by the domestic mutual funds.
Taking exposure of the international equities via an international fund provides an investor a hassle-free approach in changing allocation between countries, professional expertise for investing in the global markets, and more importantly, it being tax-efficient, as there is no tax impact on rebalancing. Additionally, the international funds offer international diversification–to benefit from counter cyclicality, by allowing them to invest in offshore destinations and earn better returns. This allows an investor to mitigate the overall risk by investing in a market that has a lower correlation to the Indian market.
ICICI Prudential’s Global Advantage Fund is an offering with a Fund of Fund (FOF) structure and acts as an umbrella fund for global allocation. Being a FOF, it invests in several international funds based on the fund view about the trajectory of the Emerging Markets (EM) and Developed Markets (DM).
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