Best International Mutual Funds 2025: Grow Investments Through International Portfolio Allocation
Investors are sure to tread an entirely new world in 2025, while global mutual funds are quite promising in portfolio diversification as well as unlocking market opportunities for capital growth through a global presence. High growth international equities through global mutual funds bring comfort from local risk factors by exploiting the momentum in strong world economies, in the wake of mixed performance in the Indian equity market.
International Mutual Funds
International mutual funds are investment instruments which pool capital from investors and then invest it outside India in any of the asset classes, which may include equities, bonds, or any other security. International mutual funds enable investors to access global markets, which would otherwise be very difficult to do directly.
Based on their investment concentration, international mutual funds either invest in developed economies or invest in the United States, Europe, and Japan or invest in emerging markets like China, Brazil, and Southeast Asia. They provide a hedge against the domestic market and its decline as well as currency fluctuation as well as give wider diversification.
Best International Mutual Funds for 2025
Among the international mutual funds, these have been relatively good and deserve a look among them are:
1. Motilal Oswal NASDAQ 100 Fund of Fund
This follows the NASDAQ 100 Index with some top technology companies like Apple, Microsoft, and Amazon. U.S. technology sector dominance brings lots of growth potential in the fund but now has restrictions on fresh investments in this fund as SEBI mandated. Alternatives to this would be the ABSL Nasdaq 100 Fund of Fund or the Axis Nasdaq 100 Fund of Fund.
2. DSP US Flexible Equity Fund of Fund
This fund invests in large-cap, mid-cap, and high-growth stocks and provides diversified exposure to the US market. This way, investors benefit from the expansion of the US economy.
3. Franklin India Feeder
Franklin US Opportunities Fund focuses mainly on US equities and invests in innovative, high-performing companies, establishing itself as a good long-term investment option.
4. Nippon India US Equity Opportunities Fund
This large-cap US-based stock fund also boasts a rather long history, with returns and especially of the two main sectors that power the US economy: technology and healthcare.
5. Invesco India Global Equity Income Fund of Fund
This is a fund investing in high-quality global stocks for capital appreciation in conjunction with earning dividend income, ideal for income investors seeking predictable returns along with potential market upside.
Best International Mutual Funds Perfromance
Performance-wise, the Motilal Oswal Nasdaq 100 Fund of Fund has given the highest returns with an annualized gain of 42.2 percent over one year, 22.6 percent over three years, and 22.8 percent over five years. The DSP US Flexible Equity Fund of Fund has generated annualized returns of 22.7 percent one year, 15.5 percent three years, and 17.9 percent five years. In this light, the Franklin India Feeder – Franklin US Opportunities Fund had gained a return of 26.4 percent one-year, 15.5 percent three-year, and 16.9 percent five-year performance. Almost immediately after Franklin is Nippon India US Equity Opportunities Fund with 26.3 percent returns in one year, 15.8 percent over three years, and 16.9 percent five-year performances. The last in this list is Invesco India Global Equity Income Fund of Fund, which returns 20.7 percent in one year, 15.0 percent in three years, and 15.6 percent in five years.
Why Invest in International Mutual Funds?
Following points discuss why to make an investment in International Mutual Funds:
1. Portfolio Diversification
Global investments minimize risk by spreading exposure across different economies and industries, making portfolios more resilient to domestic economic fluctuations.
2. High-Growth Markets
International markets and the US and China host the world’s best companies, which can be accessed for technology, healthcare, and emerging sectors, thus making them an attractive investment opportunity.
3. Currency Hedge
Since the Indian Rupee has been in depreciation against foreign currencies, it adds an extra layer of returns on international investments.
4. Sector-Specific Growth
Most high-growth industries, for example artificial intelligence, electric vehicles, or biotechnology, have much more of a global market presence and lower domestic market presence so that international funds would be the first attractive category of investment.
Risk Factors- International Mutual Funds
1. Currency Fluctuations: It will have an impact on returns, and a strong Indian Rupee can also reduce the gain from international investments.
2. Economic and Political Risk: Such includes changes in international regulations, recession in particular economic regions, and political upheaval in a few regions.
3. Volatility in Markets: Stock markets tend to have considerable short-term volatilities especially in developing nations, affecting stability in investment.
4. Greater Expense Ratio: International investing carries additional overhead, making it pricier as compared to its domestic equivalent, with regard to the cost ratios of a fund.
Key Things to Keep in Mind Before Investing
1. SIP vs. Lump Sum Investment: Although systematic investment plans or SIPs are recommended for continuous investing, the time may be ripe for lump sum investments in a correction or down cycle of the market.
2. Long-term Investor: International funds should be ideally considered for long-term investors who can sustain the shocks in the short term.
3. Tax Structure: Short-term gains, which are investment made for a period lesser than three years, are taxed based on individual income tax slabs. Long-term gains are taxed at 20 percent with indexation advantage.
4. Expertise in Fund Management: The funds should be managed by experts who have a strong set of expertise about the global market. This helps to deliver better security and consistent returns.
International mutual funds would be an excellent opportunity for Indian investors to diversify their portfolios and gain greater exposure to global economic growth. Of course, these funds have some inherent risks involved, but strategic allocation to well-performing funds would yield quite a good return over time. Careful assessment of financial goals, risk tolerance, and investment tenure helps in maximizing benefits from global investing.
