Explaining the basics, Mukherji said international funds are “pure equity diversified funds” linked to a specific region or country ETF, such as the US, Japan, or China. Hybrid or multi-asset funds, in contrast, combine domestic equity, debt, commodities, and sometimes international exposure.
The two fund types also differ in risk. “In an international equity fund, since it’s 100% equity, it is high risk,” Mukherji noted. Hybrid funds, by including debt and domestic equities, offer a more moderate risk profile.
Currency fluctuations can further impact returns. Mukherji explained, “A stronger rupee can reduce your returns, whereas a weaker rupee can enhance them.”
Expense ratios tend to be higher for international funds, as investors effectively pay for both the local fund and the overseas ETF. Hybrid funds generally have lower costs, and the fund manager’s ability to rebalance between equity and debt can smooth returns.
On portfolio allocation, Mukherji recommended treating global exposure as a satellite allocation. She suggested a “10% diversification into international funds,” with 5–10% being a practical range depending on individual risk appetite.
Regarding entry strategies, she advised investors to avoid lump-sum investments in the current uncertain environment and instead consider systematic approaches such as STPs (Systematic Transfer Plans) or SIPs (Systematic Investment Plans).
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