International diversification with mutual funds?

#1

While watching this live video by Neil Parag Parikh on international investing, I have a few questions. Since the Live chat is disabled, posting them up here.

  1. INR is currently weak against USD. Will investing in International Fund mean value “lost in conversion”?

  2. General Elections in India are scheduled in 2019. Past data shows an inflow of foreign funds during elections campaigns etc.

  3. US Presidential Elections to be held in 2020 and the election campaign requires funds. So international Mutual funds would see redemptions. Also these days global trends affect our market a lot.

  4. The taxation of Internation Mutual Funds is different in my knowledge. Keeping that in mind.

  5. The world is eager to invest in India market, they find our market lucrative, and we are looking to invest outside India? Is there a need?

Let’s discuss.

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#2

He answered this in the video. Just by holding a currency hedge, they generate an yeild of 5%+.

He basically said, they are in it for the long run and not in the rat race for AUM. They don’t care about the noise.

Yep.

In INR terms Indian markets haven’t beaten the S&P 500. He shows the data in the video.

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#3

How about international ETFs?

#4

What about them?

#5

when compared to international MFs.

#6

I think in India there just a couple of them Most N100 and Hangseng Bees if i’m not wrong. Both of them are severely illiquid with their prices deviating significantly from the NAV.

PPFAS isn’t an international mutual fund, it has international exposure. Important distinction.

#7

are there any taxation issues that we need to take care of while investing though international mutual funds?

#8

International FOFs are treated similar to debt mutual funds, even though they invest in equities.

But funds like PPFAS and Axis aren’t. They are treated like normal equity funds because they cap the international exposure at 35%

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#9

So that means any MF units sold under 3 years would be considered as STCG?