What are Thematic MNC funds

MNC mutual funds are thematic funds that invest their majority in the Multinational companies theme.
EXPLORE FUNDS
MNC Thematic Mutual Funds
EXPLORE FUNDS
3 min
07-May-2024

What are Thematic MNC Funds?

Thematic MNC mutual funds are a type of mutual fund that invests in a basket of different Multinational Companies (MNCs) across sectors and industries. Investing in such funds can give you exposure to Indian corporate giants with a global presence as well as international companies with Indian subsidiaries. In addition to tapping into the potential of domestic markets, these MNC funds also let you capitalise on the potential of international markets and global economic trends.

Now that you are aware of what thematic MNC mutual funds are, let us explore the target audience for this investment option.

Should you invest in MNC funds?

If you are an investor seeking exposure to globally renowned companies with a diversified geographical presence, thematic MNC mutual funds may be the ideal option for you.

Furthermore, since thematic MNC mutual funds generally invest in a wide range of sectors, you may also consider investing in them if you are seeking a well-diversified portfolio with the potential to deliver market-beating returns.

However, it is important to note that multinational companies often face more risks due to their exposure to both the domestic and international markets. Therefore, investing in MNC mutual funds is advisable only if you have a high level of risk tolerance and a long investment horizon.

How to calculate Thematic MNC fund returns?

If you are planning to invest in a thematic MNC fund, you need to first know how to calculate mutual fund returns. This will help you make informed investment decisions and may even make it easier to choose the fund that is right for you.

SIP investment

If you wish to invest in a fund via a Systematic Investment Plan (SIP), the formula you need to use to calculate the returns is as follows.

FV = P(1 + r/n)^(n*t)


Here, P represents the initial amount of SIP investment, r represents the annual interest rate, n represents the number of times interest is compounded per year and t is the investment tenure (in years).

Lumpsum investment

If you wish to make a lumpsum investment in a thematic MNC mutual fund, here is how you can calculate the returns.

A = P (1 + r/n) ^ nt


Here, A represents the future value of the investment, P is the principle investment amount, r is the expected rate of return, t is the duration of the investment and n represents the number of compounded interests in a year

How to select suitable Thematic MNC mutual funds?

Choosing the best thematic MNC mutual funds requires you to thoroughly consider a plethora of different factors. Let us look at some of the key factors that you need to account for.

Investment objectives

The mutual fund that you wish to invest in must always align with your investment goals and time horizon. For instance, if your goal is to save up for a house within the next 10 years, the fund you choose must be able to produce returns that will get you closer to your goals within the intended time frame.

Investment risk

Although most thematic MNC mutual funds are categorised as high-risk investments, the actual risks affecting their performance may vary slightly. It is important to choose a fund with a risk profile that matches your risk tolerance.

Returns

The fund’s performance is another major factor that can help you choose the right option. Compare mutual fund’s historical returns with its benchmark and other similar funds to gauge its performance and potential for wealth creation. However, keep in mind that past performance is not a guarantee of future returns.

Expense ratio

The expense ratio is a fee that a mutual fund scheme levies. It helps cover the operational and administration costs associated with the fund. Since the expense ratio directly impacts overall returns, consider opting for a fund with lower fees to minimise costs and enhance long-term returns.

Conclusion

Thematic MNC mutual funds offer a good opportunity to diversify your portfolio and gain exposure to global market leaders. By investing in these funds, you can capitalise on both domestic and international growth opportunities. If you are looking for different types of mutual funds to invest in, check out the 1,000+ mutual fund schemes available on the Bajaj Finserv Mutual Fund Platform.

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Disclaimer: Bajaj Finance Limited (“BFL”) is an NBFC offering loans, deposits and third-party wealth management products.

The information contained in this article is for general informational purposes only and does not constitute any financial advice. The content herein has been prepared by BFL on the basis of publicly available information, internal sources and other third-party sources believed to be reliable. However, BFL cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. 

This information should not be relied upon as the sole basis for any investment decisions. Hence, User is advised to independently exercise diligence by verifying complete information, including by consulting independent financial experts, if any, and the investor shall be the sole owner of the decision taken, if any, about suitability of the same.

Frequently asked questions

What are MNC funds?
MNC funds are a type of mutual funds that invest in multiple multinational companies across sectors and market capitalisations. These funds are designed to offer exposure to both the domestic and the global markets.
What is the best MNC fund for me?
There is no single ‘best’ MNC mutual fund. It varies from investor to investor and is dependent on a plethora of factors like investment goals, risk tolerance and performance metrics, among others.
How are MNC funds taxed?
Thematic MNC mutual funds are taxed like other equity mutual funds. The dividends, if any, are added to your total income and taxed at the income tax slab rate applicable to you. Short-term capital gains are taxed at a flat rate of 15%, and long-term capital gains of more than Rs. 1 lakh are taxed at 10% without any indexation benefit.
Is it a good time to invest in MNC funds?
The ideal time to invest in MNC funds is dependent on multiple factors like economic outlook, market conditions and your financial goals. If you are unsure of the right time to invest, consider opting for the SIP mode of investment since it eliminates the need to time your investments.
Are MNC mutual funds risky?
Yes, thematic MNC mutual funds are high-risk investment options despite offering diversification benefits. Some of the risks they are prone to include market risk, volatility risk, economic downturns, currency fluctuations and geopolitical instability, among others.
What is the recommended investment tenure for thematic MNC mutual funds?
The ideal investment horizon for thematic MNC mutual funds is dependent on your financial goals, risk tolerance and market conditions. However, you should consider staying invested for the long term since it would help you mitigate short-term market fluctuations.
In which companies do thematic MNC funds invest?
Thematic MNC mutual funds invest in Indian multinational companies with a global geographic presence as well as international multinational companies with subsidiaries in India.
How do I know if thematic MNC mutual funds are the right choice for me?
If you are a risk-aggressive investor looking for exposure to leading global companies, you may consider investing in thematic MNC mutual funds.
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Disclaimer

Bajaj Finance Limited (“BFL”) is an NBFC offering loans, deposits and third-party wealth management products.

The information contained in this article is for general informational purposes only and does not constitute any financial advice. The content herein has been prepared by BFL on the basis of publicly available information, internal sources and other third-party sources believed to be reliable. However, BFL cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. 

This information should not be relied upon as the sole basis for any investment decisions. Hence, User is advised to independently exercise diligence by verifying complete information, including by consulting independent financial experts, if any, and the investor shall be the sole owner of the decision taken, if any, about suitability of the same.

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