International Fund of Funds invest in funds domiciled outside India. They channel money from investors in India and invest the proceeds in a fund which is managed from a overseas location. Some international Funds also invest directly into overseas stocks.

These funds offer the opportunity to invest in some of the world's largest and most innovative companies. Before diving into International/Global Fund of Funds, it is crucial to understand three key aspects:

1. Goal: International Funds provide exposure to foreign markets, allowing you to diversify your portfolio beyond Indian companies.
2. Investment Horizon: These funds are ideal for investors looking to diversify globally with a long-term investment perspective.

Risk: Currency fluctuations and geopolitical risks add complexity and increase the overall risk. On the other hand, exposure to dollar provides a hedge against domestic currency depreciation.

Before investing in international funds, it's essential to consider your risk tolerance and financial goals, both short-term and long-term.

Steps to Invest in International Mutual Funds from India

1. Research and Identify Your Investment Goals: Clarify your investment goals. Are you seeking long-term growth, diversification, or exposure to specific markets? Understanding your objectives will help you select the international mutual funds that best aligns with your financial aspirations.
2. Choose the Right Type of International Mutual Fund: International mutual funds come in various types, each with their unique investment strategy and focus. Common types include:

• Developed Market Funds: These funds invest in companies that are listed in developed markets like US, Japan, Germany, and so on.
• Regional Funds: Focus on specific regions, such as Asia, Europe, or Latin America.
• Country-Specific Funds: These funds invest in securities from a particular country, such as the United States, China, or Japan, Brazil and so on.
• Thematic Funds: Invest in specific themes or sectors, such as technology, healthcare, or renewable energy.
  

1. Evaluate the Fund's Performance and Risk: When selecting an international mutual fund, evaluate its past performance, ideally over a 5 year period, and risk profile. Consider historical returns, volatility, and performance during different market conditions.
2. Choose the Right Platform: Several platforms facilitate investing in international mutual funds from India. These platforms offer access to various funds and provide tools to assist you in making informed investment decisions. Before choosing, assess each platform based on its features, user-friendliness, and customer support.
3. Complete the KYC Process: Before investing in international mutual funds, you must complete the Know Your Customer (KYC) process. This involves submitting identification documents, proof of address, and other necessary information to verify your identity. The KYC process is a regulatory requirement and ensures the safety and security of your investments. If you are an existing KYC compliant investor in mutual funds, no additional documents are required.
4. Diversify Your Investments: Diversification is a crucial principle in investing. Spread your investments across international mutual funds by investing in a mix of developed, emerging and REITs to reduce risk. To achieve a balanced portfolio, consider investing in funds focusing on other regions, sectors, and asset classes.

Who Should Invest in International Funds?

International Funds may appeal to the following types of investors:

• Experienced Investors: Those with a well-diversified portfolio and significant exposure to domestic markets may find International Mutual Funds suitable. These funds might be a better choice for experienced investors.
• Diversification Seekers: This fund can be beneficial if you want to invest in markets with a lower correlation to your home country's market. For example, if Indian markets are struggling, you can invest in international markets to diversify your portfolio.
• Long-term Goals: International Funds can help achieve long-term objectives like child's foreign education or a overseas vacation. A long-term investment horizon protects you from equity market volatility. Aim for a five-year investment horizon to reap maximum benefits.

Some International Funds provide extensive global exposure, while others concentrate on specific regions. Evaluate the fund's holdings, allocation, and historical performance to ensure it matches your goals and risk tolerance. Additionally, consider the tax implications based on your income before finalizing your investment.

Conclusion

Investing in international FoFs/Global Fund of Funds from India can be a rewarding strategy to diversify your portfolio and gain exposure to global markets. As you begin this journey, remember the importance of diversification, thorough research, and careful decision-making. Investing wisely will enable you to unlock the full potential of international mutual funds and build a strong and resilient investment portfolio.