Many Indian investors are looking at global options in 2025, and international mutual funds are a hot topic. Is putting your money into them a smart move? This is a key question as the world's economies shift and change. Understanding core investment ideas is vital, and one proven method is value investing. This involves locating investments that are actually worth more than their present market value. The presumption is that the market will ultimately see this real value.

But what is value investing when we are speaking of companies everywhere in the world? It's not simply purchasing cheap shares. It's actually deep-diving into a company's financial standing, its sector, and its management. You want to look at solid businesses that are temporarily undervalued or misunderstood by the broader marketplace. As we move ahead to cover international mutual funds, we'll check if applying a similar value investing strategy can enable you to diversify your funds and discover growth tales beyond India. This article will make you know whether international mutual funds are right for your investments in 2025 and onwards.

What Are International Mutual Funds?

International mutual funds gather money from investors to buy assets like stocks and bonds in companies outside of India. For an Indian investor, this means gaining exposure to markets in the US, Europe, or other emerging economies without directly buying foreign shares. They are held by professional investors who take decisions on investing.

When you invest, you purchase units of the fund. The performance of your investment subsequently rides on the value of these foreign assets. This provides a more straightforward method of diversifying abroad, without the hassle of direct overseas trades like currency exchange or foreign brokerage accounts. Such diversification has access to growth opportunities not necessarily available locally, consonant with principles usually associated with value investing where opportunities are pursued wherever they exist.

Types of International Mutual Funds

The international mutual fund universe has numerous structures to address all levels of risk and all investment objectives. Funds can be regionally specific, industry-specific, or have global exposure. Each of these needs to be understood. Importantly, most of these fund structures can implement a value investment approach, where managers are actively on the lookout for cheap companies within their given investment focus.

Here’s a breakdown of common international mutual fund types:

Advantages of International Mutual Funds

International mutual fund investment in 2025 holds great attraction for Indian investors who want to diversify portfolios, largely practicing value investing principles.

• Global Diversification: Diversifying investments outside India helps minimize dependence on one economy, providing a cushion if the home market is not performing well.

• Access to Growth: Access high-growth sectors and innovative businesses that are present globally, such as American tech companies or European luxury brands.

• Sole Exposure: Invest in industries or company types not commonly found in India, offering unique opportunities.

• Currency Advantage: Benefit from appreciation of foreign currencies relative to the Indian Rupee, which could enhance returns at the time of conversion.

• Professional Handling: Experts handle these funds, undertake world research, and pinpoint opportunities, including those that align with what is value investing at a worldwide level, sparing you considerable effort.

Potential Risks of International Mutual Funds

Although useful, overseas mutual funds are not risk-free. It is necessary to know them, even for value investors, since no investment is problem-free.

• Fluctuations in currency: Variations in exchange rates will impact returns. If the Rupee appreciates against the US Dollar, US-focused fund's Rupee returns could be lower even if local performance is acceptable.

• Geopolitical and Economic Instability: Political conflicts, trade wars, or external economic recessions may negatively impact investments. For example, a European fund may be adversely impacted by instability in the Eurozone.

• Regulatory Changes: Foreign nations have varying laws. A foreign tax or investment policy change can affect the performance of a fund. Unexpected regulatory change can radically alter an asset's underlying value, affecting a value trading strategy.

• Liquidity Problems: Some foreign securities or markets may be less liquid, and therefore it would become harder for fund managers to trade effectively, especially during challenging market conditions.

• Informational Gaps: Accessing timely and accurate information for foreign companies may become challenging, and thus detailed due diligence would become challenging for investors and managers pursuing a long term value investing approach.

• Higher Fees: International funds charge more in expenses due to the complexity of dealing internationally, hedging currency, and extensive research, which eats into net returns.

Top Rated International Mutual Funds in India (2025 Update)

For Indian investors looking for foreign exposure in 2025, some international mutual funds have performed exceptionally well. What follows presents some of the notable ones based on information as of January 13, 2025. Keep in mind that previous performance does not ensure future outcomes when evaluating these. A key element of effective long term value investing is to join ranks with funds that spot and invest in fundamentally good businesses without regard to short-term market trends.

• ICICI Prudential MNC Fund: It was launched in 2014 with a concentration on multinational companies (MNCs) in India. As of January 13, 2025, it had an AUM of Rs. 1,723.68 cr. at an expense ratio of 1.05%. Its 5-year CAGR stood at 22.94%. It is one of the top global mutual funds in India because of its high concentration on multinational companies.

• SBI Magnum Global Fund: Launched in 1994, this scheme invests in multinationals from different industries for long-term capital appreciation. As of January 13, 2025, it had an AUM of Rs. 6,641.60 cr. and an expense ratio of 1.20%. Its 5-year CAGR was 15.97%, and the 10-year CAGR was 12.07%. This fund can be an option for investors who want exposure to foreign mutual funds in India.

• UTI MNC Fund: Started in 1998, this fund is also dedicated to Indian multinational companies, using their competitive strengths for growth. On January 13, 2025, its AUM was Rs. 2,937.22 cr. with an expense ratio of 1.19%. Its 5-year CAGR was 15.21%, while the 10-year CAGR was 11.82%.

• Nippon India US Equity Opportunities Fund: This fund was founded in 2015 and invests in companies based in the US with growth potential. On 13 January 2025, its AUM stood at Rs. 700.22 cr., and the expense ratio was 1.28%. The 5-year CAGR was 15.06%. This presents a clear path to implementing practices of what is value investing in a leading global economy.

• ICICI Prudential US Bluechip Equity Fund: Incepted in 2012, this fund focuses on large-cap US entities for offering global exposure. On January 13, 2025, it had an AUM of Rs. 3,228.15 cr. and an expense ratio of 1.19%. The 5-year CAGR was at 14.74%, and the 10-year CAGR was 14.79%.

How to Choose the Best International Mutual Fund

Investing in a global mutual fund entails careful consideration beyond returns parameters. A value investor would look carefully at different parameters to ascertain whether the fund is appropriate for his objectives and risk profile.

• Objective Match: Ensure the fund's investment goal (growth, income) corresponds to yours. Is it suitable for a value based strategy that aims long term capital appreciation from undervalued holdings?

• Geographic/Sector Focus: Recognize its main areas of investment (e.g., US, Europe, particular sectors). Diversify your international exposure.

• Manager Expertise: Learn the experience and philosophy of the fund manager. A manager skilled in how to value invest overseas is important.

• Expense Ratio: Less in fees means more of your money increases. Compare these expenses between similar funds, as high fees eat into returns, something of concern for anyone engaged in value trading.

• Risk Profile: Assess the volatility of the fund. International funds have unique risk factors (currency, geopolitics). Choose a fund that has a degree of risk with which you feel comfortable.

• Consistent Performance: Look for consistent performance across market cycles, not just high returns. That is a reflection of the quality of its underlying value investing approach.

• AUM: Assets Under Management might be a sign of confidence, but very large AUMs may limit flexibility in specialized markets, especially for dogmatic value investing approaches.

• Exit Load & Taxation: Be aware of any pre-withdrawal charges and tax policy for international mutual funds in India.

How to Invest in International Mutual Funds?

Investing in international mutual funds offers Indian investors global diversification. For those interested in what is value investing on an international scale, mutual funds provide a simplified route.

The process generally involves:

1. Choosing a Platform: Select a reputable AMC or online platform that offers international mutual funds, including "fund of funds" (FoFs).

2. Passing KYC: Fulfill the mandatory one-time Know Your Customer verification.

3. Fund Selection: Research and choose funds that align with your goals and risk. Seek those with a value investing approach.

4. Mode of Investment: Invest via a Systematic Investment Plan (SIP) or in lump sum.

5. Currency Management: Invest in INR; foreign currency conversion is handled by the fund house as per RBI's LRS regulations.

6. Monitoring: Monitor performance and world conditions on a regular basis. Monitoring is most important for long term value investing.

Consult a financial advisor for personalized guidance.

Taxation Rules for International Mutual Funds in India (FY 2025)

Indian investors, particularly for FY 2025-26, should be aware of international mutual funds' tax implications. Such funds (invested in less than 65% in Indian shares) are eligible for differential tax treatments.

• Capital Gains:

• Short-Term (≤24 months): Gain added to overall earnings, taxed at your slab rate.

• Long-Term (>24 months): Gain liable to tax at a flat rate of 12.5% with no indexation.

• Dividend income: Completely taxed, listed as part of your overall income and taxed at your slab rate. Foreign tax credit (FTC) applicable.

• TCS on Remittances: A 20% TCS is levied on remittances of over ₹10 lakh in a FY for investment through LRS. This is deductible from your final tax. (Source: Finance Act 2024).

• Reporting: 'Resident and ordinarily resident' Indians are required to report foreign holdings in Schedule FA of their ITR.

Always seek the advice of a tax professional for personalized advice, especially when using value trading or value investing techniques across borders.

Conclusion - Are International Mutual Funds Right for You in 2025?

International mutual funds provide Indian investors with a vehicle for global diversification in 2025. As attractive as global opportunities to grow are, particularly for those who use value investing, exposures such as currency volatility and geopolitics need to be carefully weighed. Changes in taxation recently introduced also reflect a changing environment. Your personal goals, risk tolerance, and horizon will ultimately determine whether these funds are appropriate. An informed approach to investing, perhaps one assisted by value based investing, can make the portfolio more resilient and better growing.

Frequently Asked Questions

Are international mutual funds available to Indian investors?

Yes, highly accessible through Indian AMCs and platforms.

Is it safe to invest in international mutual funds?

They have inherent risks (currency, geopolitics). When diversifying, they're not risk-free. A value investing approach can assist in determining better opportunities.

Can I invest in international mutual funds via SIPs?

Yes, SIPs are highly accessible, making long term value investing easy.

Do I need a foreign trading account to invest in these funds?

No, you invest in INR through Indian platforms; they handle foreign currency. This makes it easy how to value invest worldwide.