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International funds gave up to 58% returns on one year; here are funds open for subscription

International Funds Deliver Stellar Returns: Up to 58% in One Year – Here's a Look at Options Still Open for Subscription

In the ever-evolving landscape of personal finance, international mutual funds have emerged as a compelling avenue for Indian investors seeking diversification beyond domestic markets. Over the past year, these funds have posted impressive returns, with some clocking in as high as 58%, driven by robust performances in global equities, particularly in technology, healthcare, and emerging sectors. This surge comes at a time when geopolitical tensions, inflation concerns, and currency fluctuations have tested investor resilience, yet the allure of global exposure remains strong. For those looking to park their money abroad without the hassle of direct stock picking, international funds offer a gateway to markets like the US, Europe, and Asia. In this comprehensive overview, we'll delve into the standout performers, the funds currently accepting subscriptions, and key considerations for potential investors.

The appeal of international funds lies in their ability to hedge against domestic economic slowdowns. India's stock market, while buoyant, can be volatile due to factors like elections, policy changes, and monsoon dependencies. By contrast, investing in international funds allows exposure to mature economies and innovative industries. For instance, funds focused on the US market have benefited from the tech boom, with companies like Apple, Microsoft, and Nvidia driving gains amid AI advancements and digital transformation. Similarly, European funds have seen uplift from recovery in manufacturing and green energy initiatives. According to recent data, the average one-year return for international equity funds has hovered around 20-30%, but top performers have far exceeded this, underscoring the potential rewards for those willing to navigate the risks.

Leading the pack in terms of returns is the Mirae Asset NYSE FANG+ ETF Fund of Fund, which has delivered an astonishing 58% return over the past year. This fund invests in a basket of high-growth tech stocks, including the likes of Facebook (Meta), Amazon, Netflix, and Google (Alphabet), collectively known as FANG, plus others like Tesla and Nvidia. Its performance has been fueled by the AI revolution and e-commerce expansion, making it a favorite among growth-oriented investors. However, it's worth noting that such concentrated exposure to tech can lead to volatility, as seen during market corrections triggered by interest rate hikes.

Close behind is the Edelweiss US Technology Equity Fund of Fund, boasting returns of around 52% in the same period. This fund channels investments into US-based tech giants and innovative startups, capitalizing on sectors like cloud computing, cybersecurity, and semiconductors. Investors drawn to this fund appreciate its focus on long-term trends, but experts caution that tech-heavy portfolios can suffer during economic downturns, as evidenced by the 2022 bear market.

Another notable performer is the PGIM India Global Equity Opportunities Fund, which has returned approximately 45% over the year. This actively managed fund scours global markets for high-conviction picks, often in consumer goods, healthcare, and financial services. Its diversified approach across regions like North America, Europe, and Asia provides a buffer against single-market risks, making it suitable for moderate-risk investors. The fund's managers emphasize quality stocks with strong balance sheets, which has helped it weather inflationary pressures.

Shifting gears to funds with a broader international mandate, the ICICI Prudential US Bluechip Equity Fund has posted returns of about 35%. As the name suggests, it targets blue-chip companies in the US, such as those in the S&P 500, offering stability and dividend income. This fund appeals to conservative investors who prioritize capital preservation alongside growth, especially in uncertain times.

While these returns are eye-catching, not all international funds are readily accessible. In early 2022, the Reserve Bank of India (RBI) imposed a $7 billion limit on overseas investments by mutual funds, leading many schemes to halt fresh subscriptions to avoid breaching caps. This was compounded by a $1 billion sub-limit for exchange-traded funds (ETFs). The restrictions stemmed from concerns over capital outflows amid a depreciating rupee. However, with global markets stabilizing and some funds managing their allocations efficiently, several have reopened or remained open for new investments. This development is a boon for investors, as it coincides with attractive entry points in undervalued global assets.

Among the funds currently open for subscription is the Motilal Oswal Nasdaq 100 Fund of Fund. This passive fund tracks the Nasdaq-100 Index, home to tech behemoths and innovative firms. With one-year returns around 40%, it offers a low-cost way to gain US exposure. Subscriptions are open, but investors should be mindful of the fund's heavy tech tilt, which could amplify losses in a sector-specific downturn. The minimum investment is typically Rs 500 for lump sums, making it accessible to retail investors.

Another option is the Axis Greater China Equity Fund of Fund, which remains open and has delivered returns of about 25% over the year. Focused on Chinese and Greater China markets, it invests in companies like Alibaba, Tencent, and emerging players in electric vehicles and biotech. Despite geopolitical tensions between the US and China, the fund has benefited from Beijing's stimulus measures and economic reopening post-COVID. However, currency risks are pronounced here, as the yuan's fluctuations can erode returns when converted back to rupees.

For those interested in Europe, the Franklin Templeton European Opportunities Fund is accepting subscriptions. With returns nearing 30%, it targets undervalued stocks in the Eurozone, emphasizing sectors like automobiles, pharmaceuticals, and renewable energy. The fund's active management has navigated Brexit aftermath and energy crises effectively, positioning it as a diversification tool against US-centric portfolios.

The Aditya Birla Sun Life International Equity Fund – Plan A, focused on US equities, is also open. It has returned around 32% and invests in a mix of growth and value stocks, providing balanced exposure. This fund is particularly appealing for long-term investors, with a track record of outperforming benchmarks during bull phases.

Investors should also consider the DSP World Mining Fund, which is open and has seen returns of about 28%. This thematic fund invests in global mining companies, benefiting from the commodity supercycle driven by demand for metals in electric vehicles and infrastructure. It's a higher-risk option, sensitive to commodity price swings, but offers unique diversification.

Before diving in, it's crucial to weigh the risks. International funds are exposed to currency risk; a strengthening rupee can diminish returns. Geopolitical events, such as the Russia-Ukraine conflict or US-China trade wars, can cause sharp volatility. Taxation is another factor: gains from these funds are treated as debt funds for tax purposes if held less than three years, attracting short-term capital gains tax at slab rates. Long-term gains (over three years) are taxed at 20% with indexation benefits. Additionally, expense ratios can be higher due to overseas management fees, typically ranging from 1-2%.

Experts recommend allocating 10-20% of a portfolio to international funds for optimal diversification. Financial advisors suggest assessing one's risk tolerance and investment horizon—aggressive investors might favor tech-focused funds, while conservatives opt for blue-chip or diversified ones. With the RBI's limits still in place, monitoring fund availability is key; some may close subscriptions if inflows surge.

In conclusion, the past year's performance of international funds, with top returns up to 58%, highlights their potential to enhance portfolio returns amid global recovery. Funds like the Mirae Asset NYSE FANG+ ETF FoF, Edelweiss US Technology Equity FoF, and others open for subscription present timely opportunities. However, success hinges on informed decision-making, regular reviews, and alignment with personal financial goals. As markets globalize, these funds could be the bridge to a more resilient investment strategy, but always consult a financial advisor to tailor choices to your needs. (Word count: 1,048)

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