Investing in mutual funds is a great way to diversify your portfolio and earn returns on your investments. International mutual funds are a type of mutual fund that invests in foreign markets. In this article, we will discuss what international mutual funds are, how to invest in them, how they work, who should invest in them, taxation on international mutual funds, factors to consider before investing in them, and the advantages of foreign funds.
What are International Mutual Funds?
International mutual funds are mutual funds that invest in foreign markets. These funds invest in stocks, bonds, and other securities of companies listed outside India. The objective of these funds is to provide investors with exposure to foreign markets and diversify their portfolio. International mutual funds are managed by professional fund managers who have expertise in investing in foreign markets.
How to Invest in International Funds?
It is simple to invest in international mutual funds. You have the option of investing in these funds via your broker or online investment platforms. To invest in international funds, you need a PAN card, a bank account, and a KYC (Know Your Customer) document. You can either make a lump sum investment or follow a Systematic Investment Plan (SIP).
How do international mutual funds work?
International mutual funds work like any other mutual fund. The fund manager pools money from investors and invests it in foreign markets. The returns on these funds depend on the performance of the foreign markets. The fund manager charges a fee for managing the fund, which is deducted from the returns generated by the fund.
Who should invest in international funds?
International mutual funds are suitable for investors who want to diversify their portfolio and earn returns from foreign markets. These funds are also suitable for investors who want to take advantage of the growth potential of foreign markets. However, investors should be aware that investing in international mutual funds involves higher risks than investing in domestic mutual funds.
Taxation on International Mutual Fund
International mutual funds are taxed like any other mutual fund. The returns generated by these funds are taxed as capital gains. The tax rate depends on the holding period of the investment. If the investment is held for less than three years, it is considered a short-term capital gain and is taxed at the investor’s income tax slab rate. If the investment is held for more than three years, it is considered a long-term capital gain and is taxed at 20% with indexation.