A Global Mutual Fund, by definition is an equity mutual fund that invests overseas in companies listed in both, the developed and emerging markets. They provide an opportunity to Indian investors to access quality global businesses, industries and themes that may not be or are limitedly inadequately available in the Indian market, thus enabling them to geographically diversify their portfolios.
Such funds are launched with the objective of tapping growth opportunities in countries like USA, Europe, Japan as well as China and Southeast Asia. Some are focused on a particular region, sector may have a diversified global investment approach and thus, based on the investment style while certain funds may adopt region specific or sector specific patterns.
Global mutual funds have the advantage of geographic diversification in investment portfolios. Foreign markets operate on different economic and monetary cycles, so investing in foreign stocks can lower the risk and volatility in a portfolio during local market downturns. Access to foreign markets can potentially improve the long-term return volatility of the portfolio. It also provides access to foreign companies with global operations which are known to be innovative, growing and highly profitable.
Through global funds, Indian investors can now invest in renowned multinational corporations and leaders in the technology, healthcare, finance, consumer, and industrial sectors. Such companies with healthy balance sheets and international demand, along with competitive barriers, enhance sustained long-term growth. With global exposure, investors can also participate in long-term trends like electric vehicles, artificial intelligence, biotechnology, renewable energy, and digital finance.