International Funds: Should You Invest Now?

It would be a wise decision to invest in international funds. Besides the current surge, there are a couple of other benefits that these funds offer to Indian investors

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Over the past few days, the Indian equity market has gained dramatically. In fact, it has jumped by almost 5 per cent in just a couple of days. It is the risk-on rally and a gush of liquidity globally that is helping the market to gain. No doubt this has created a wave of excitement among investors. Nonetheless, if you take a look at the world indices, the increase in Indian equity markets looks pale in comparison. Despite such gain by the equity indices in India, they are grossly underperforming the global indices. And excluding the French equity index represented by CAC, the Indian equity market has remained at the bottom of the performance in every time period in the last year.

The graph below highlights the performance of the global indices against Nifty in different time periods. It clearly shows the underperformance of the Nifty. Further, the performance of these equity indices is reflected in the performance of mutual funds dedicated to such geographies. There are 34 equity mutual funds in India categorized as international funds that are investing overseas. On average, these funds in the last one year have generated returns of 11.03 per cent compared to negative 17.17 per cent generated by Indian large-cap dedicated equity funds in the same period. Hence, international funds have outperformed domestic funds by almost 29 per cent in the last one year.