International Mutual Funds Compare

Additional Useful Information

• An investor can buy “Units” of these mutual funds. These units can be purchased at a price which is called the “Net Asset Value or NAV”. The NAV of these funds keeps changing daily depending upon the changes in the stock prices of the companies that are held by them.

• The investor can sell these units anytime at the NAV price prevailing on the day of the sale.

• Total Purchase Amount	=	Number of Units X NAV as on the day of purchase
  Total Sale Amount	=	Number of Units X NAV as on the day of sale
  Total Gain	=	Total Sale Amount – Total Purchase Amount

• The fund house which issues an International Mutual Fund may offer two options to select from –
• IDCW Option – In this option, growth in the mutual fund value is distributed back to the investor’s bank account in the form of periodic payouts called “Dividends”. This payout could be monthly or quarterly.
• Growth Option – In this option, growth in the mutual fund value is invested back in the fund for further growth. The investor’s gains are in the form of higher NAV price of the units of the fund.

• If an investor buys units in an International Mutual Fund and sells them within a certain short period of time, then the fund house may charge the investor, certain nominal fees, at the time of the sale. These charges are the “Exit Load”. This period is typically less than 1 year but varies from fund to fund. Typical exit loads can vary from 0 to 1.5% of the sale amount.

• Fund managers invest your money in foreign stocks through two methods:
• Directly purchasing stocks to build a portfolio.
• Investing in existing global funds with pre-designed portfolios containing foreign company stocks. These types of mutual funds are called Fund of Funds.

Returns *

• International Mutual Funds do not guarantee any returns. They are subject to market risks.

• If International Mutual Funds are held over a 5-year period, they could generate returns ranging from 7% to 17.5% per year.

Risk Level

• International Mutual Funds are categorized as very high-risk investments since they invest in the international stock market.

• Investing in international funds can be risky, especially because of currency changes. Variations in the Indian rupee’s value against the U.S. dollar can directly affect the Net Asset Value (NAV).

• The politics, economy, and social issues of a country can greatly affect how well a fund performs. So, it’s important to understand these factors and watch the market closely.

Liquidity

• When an investor sells (or redeems) units of these funds, the fund house will pay the sale amount to the investor in 5 working days (T+5).

Interesting Facts

• When investing in international stocks, it’s crucial to understand different markets.
• Developed markets offer stability and lower risk. (e.g. US, UK, Germany)
• Emerging markets provide higher growth potential with increased risk. (e.g. Brazil, India)
• Frontier markets present high risk and high reward with limited liquidity. (e.g. Colombia, Indonesia)

• International mutual funds in India offer diverse options for investors seeking global diversification. Popular choices include Japan, China, Europe, Brazil, and the United States.

• Investing in international funds enables you to hold shares in major global companies such as Apple, Google, and Microsoft.

• International mutual funds are administered by Indian mutual fund companies and regulated by the Securities Exchange Board of India (SEBI).

• Many brokerage platforms provide an option to buy fractional shares of US stocks. This allows you to invest in expensive stocks with smaller amounts of money, making it easier to diversify your portfolio and access a wider range of investment opportunities in the US market.

Tax Implications

• Earnings received from International Mutual Funds are taxable.

• When investors sell their Large Cap Mutual Fund units, the difference between the Sale Amount and Purchase Amount is typically called “Capital Gain” or “Capital Loss” (if sale amount is lesser than the purchase amount).

• The tax that the investor must pay on Capital Gain is –
• Situation 1 – If the International Mutual Funds are sold within a period of 2 years from investment, the Capital Gains earned (called Short Term Capital Gains) are added to the taxable income of the investor and taxes are required to be paid based on the applicable tax slab.
• Situation 2 - If the International Mutual Funds are sold after a period of 2 years from investment, the Capital Gains earned (called Long Term Capital Gains) are taxed at 12.5% of the gain.

• There is no tax in case of “Capital Loss”.

• For any dividends/payouts received by investors from Large Cap Mutual Funds, these amounts are added to their total taxable income and tax is required to be paid as per the tax slab.

• Dividends received are taxed as per the income slab of the investor. However, India has Double Taxation Avoidance Agreement (DTAA) with several countries to avoid double taxation on income. This means that if you have paid taxes in the country where the stocks are held, you can claim a tax credit in India for the taxes paid abroad, reducing your overall tax liability.

Where To Invest

• https://scripbox.com/mutual-fund/international