Investing abroad without restrictions, its been a long time coming for Indians. And now its possible not just to invest abroad, but actually do it with the convenience of a mutual fund !
To provide some history, Principal Global Opportunities fund was launched in 2004 with the objective of investing abroad. But till last year, the government permitted funds to invest only in those foreign companies which had a 10 per cent stake in an Indian company. So the whole diversification factor was restricted to less than 50 companies. Which in turn made the fund a complete dud.
But such a restriction no longer exists and mutual funds are allowed to freely invest abroad. Because of this, the fund has now repositioned itself and instead of investing directly into stocks abroad, the fund invests most of its corpus in PGIF Emerging Markets Equity Fund. Rather than tracking equities in so many markets, the fund house has decided to invest through this fund as it already possesses the expertise to invest in these markets. This means that the fund's portfolio has dominant exposure to countries like South Korea, Brazil, Russia, China and Taiwan.
Do note that these emerging markets generally offer great return potential, but also happen to be very volatile. So if you have already invested in India and want to spread your risks, this is a great way to do it. And on top of the convenience, the charges for the fund are less as their overheads are less. All in all, a great way to diversify your portfolio.
1 comment:
good article
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