International equity mutual funds provide a convenient vehicle for domestic investors to gain exposure to international equity without the hassle of direct equity management, exchange rate conversion and foreign tax implications. In the long-term, international equity mutual funds also act as a hedge for foreign exchange depreciation.

However, only a few international equity funds available actually invest directly into equity or equity related securities of companies in the sector/region/country specified in the fund objective, as they bear a risk for the fund manager to actively track and/or react to region/ country/ industry/ company-specific events in different time zones (as needed).

Majority of the international equity funds operate in a Fund of Fund (FOF) model, i.e. investing in units of one or more other existing international mutual fund(s) / ETFs. These are also known as feeder or sub-funds that feed investments into a single master fund that is managed by an investment advisor handling the equity investments. In such a case, investors should track the performance of the underlying master fund and/or the investment advisor.

Therefore, given the additional risks / tracking associated with international equity funds, we advise investors to invest in funds directly replicating a particular international index or FOF schemes with ETFs of the particular international index as the underlying master fund.

Please scroll below to observe performance of international equity funds across categories based on their respective objectives (sector/region/country).

US-Focused Funds: 

The United States of America is the world's largest economy in nominal GDP ($21 trillion) and accounts for ~23.5% of the global GDP. The United States Dollar (USD) is the most used currency in international transactions and the world's foremost reserve currency. 

The United States is also recognized as the most technologically powerful economy in the world with companies at or near the forefront in technological advances. Therefore, some of the US-focused funds are further concentrated to equity or equity related securities of technology companies.

It has 4 major equity indices: S&P 500, Dow Jones 30, Nasdaq 100 and Russell 2000.

International Funds

Asia Pacific-Focused Funds: 

Asia-Pacific, as a whole, contributes ~$30.6 trillion in nominal GDP or 34% share of the global GDP. The top 5 economies, i.e. China, Japan, India, South Korea and Australia contribute over 80% of Asia-Pacific's nominal GDP.

In terms of equity returns (in local currency), a majority of the Asia-Pacific countries have similar price returns to the US over the last 20 years, while Japan has significantly underperformed with negative return in the same period. Therefore, Asia Pacific ex Japan has also become a well-used terminology for investments in Asia Pacific countries excl. Japan.

International Funds

Europe-Focused Funds: 

Europe, as a whole, contributes ~$23 trillion in nominal GDP or 25% share of the global GDP. The top 5 economies, i.e. Germany, UK, France, Italy and Russia contribute nearly 60% of Europe's nominal GDP.

Europe's nominal GDP has only grown 1% in absolute terms over the last 10 years, which is attributed to the recession triggered by the global financial crisis in 2008-09. As shown in the chart above and table below, Europe has also provided very minimal equity returns to investors in the last 7-10 years.

International Funds

Emerging Markets Funds: 

An emerging market generally refers to a developing nation that is becoming more engaged with global markets as it grows, demonstrated by increased liquidity in local debt and equity markets, increased trade volume and foreign direct investment, and the domestic development of modern financial and regulatory institutions. 

Emerging market economies can offer greater returns to investors due to rapid growth, but also offer greater exposure to some inherent risks due to their status.

At present, ~20 economies in the world are classified as emerging markets based on levels of income, quality of financial systems and growth rates. Notable emerging markets include India, Mexico, Russia, Saudi Arabia, China, and Brazil.

International Funds

Global Funds: 

These are international equity funds that allow fund managers to invest in equity or equity related securities across companies worldwide for wealth generation with no specific region or sector constraints in their objective.

International Funds

Global Thematic Funds: 

These are international equity funds that invest in equity or equity related securities across companies worldwide based on a specific sector or theme as mentioned in the fund's objective. However, these funds do not have any region / country-level constraints.

International Funds