Global Equities Investment Guide

We are living in an increasingly globalised world. As an Indian consumer, we have benefitted from access to a variety of high-quality goods and services that are produced, researched, innovated outside India.

Why Global Equity?

Our day start with search on Google, order online on Amazon or Flipkart, use of Apple or Samsung mobile phone, we use or like to own BMW, Toyota, Honda  or Tesla, and most importantly we spend times on social media like Facebook, What’s app, Twitter, watch movies on Netflix or YouTube, list goes on and on. Globally, there is a lot of innovation taking place that is impacting our day to day lives by disrupting various industries and will have investment implications. At this point of time, very few innovators are listed on the Indian stock markets.

India may be the fifth-largest economy, but our market cap is about USD 2.1 trillion while market capitalisation of the rest of the world is USD 90 trillion which is just 3% of global market. So if you are not invested in global markets outside India, you are ignoring an opportunity that is roughly 43 times bigger. Investing entails risk and risk cannot be eliminated but can be reduced by diversification. Diversifying investments across asset classes and also within the asset class is key to manage risk.

Winners keep rotating across geographies. Different markets do well at different of points of time. Exposure to various geographies ensures that portfolio does not depend on fortunes of single market. For e.g. in the year 2020, pandemic impacted all the global markets. However, if we look at the performance of equity indices of each country, there were different levels of falls and recoveries.

Investing in global funds also helps you get the benefit of foreign exchange fluctuations. Over the last 35 years, the rupee has depreciated by an average of 6%. So if you are planning for your daughters or sons education abroad a few years down the line, you will have to account for higher cost due to the rise in fees and foreign exchange fluctuations.

When we invest in other countries, we are diversifying Economical and political risk with respect to our local resident country.

How to Participate

Similar to domestic equity fund, investor invests in Global fund in Indian Rupee. Global fund depend on its objective invest in mutual fund scheme/s or directly in listed global companies. At the time of Redemption, Investor will get money in his bank account in Indian Rupee only.

Diffrence between Global funds and International Fund

International fund invest anywhere other than domestic companies. Global fund can have exposure to domestics companies in addition to global companies.

Advantage of Investing via Global Mutual Funds

  • Treated as a domestic fund: Investments into these funds are treated like investments into any other domestic fund. No separate approval required.
  • Liberalised Remittance Scheme (LRS) is not applicable, so no upper limit of Investment.
  • Experts manage funds: Professional fund managers have the expertise, technology and global reach needed to identify, analyse and monitor stocks, portfolios and global events.
  • Diversification: Mutual funds typically own many stocks (about 30 – 50 stocks in case of active funds) in different countries and across various industries, which offers diversification across geographies, sectors and currencies.
  • No addition discloser required while filling Income Tax Return (ITR) in schedule FA.
  • Much lower cost of Investment over direct investment.

Taxation

To conclude, investing in global equities through mutual funds is a superior option for individuals than doing direct equities.

Global Scheme Performance