6 international mutual funds are reopening: 5 delivered double-digit returns in 1 year – is it time to invest?

Several international mutual funds are reopening to Indian investors, with one AMC resuming subscriptions from 24 September and another from 28 September.

According to Value Research, Aditya Birla Sun Life Mutual Fund has announced the resumption of fresh subscriptions in three international schemes from 24 September. The limit is capped at ₹1 crore per PAN per day across fresh and existing subscriptions, including lumpsum, switch-ins, SIPs and STPs.

Invesco Mutual Fund will resume fresh and existing subscriptions in three international funds from 28 September. Investors can invest through lumpsum, switch-ins, and fresh SIP, STP or IDCW transfer registrations.

Fresh and existing subscriptions, including lumpsum, switch-ins and SIP/STP registrations and instalments exceeding ₹10 lakh per investor per day, will not be accepted in Invesco schemes.

With these schemes opening and closing for subscriptions periodically, should investors consider investing simply because they are available again?

How have these six international funds performed over last year?

The six schemes that have reopened for subscription have delivered mixed returns over the last year. While five recorded positive returns, one scheme was in the red.

Why do mutual funds close and reopen international schemes?

The periodic opening and closing of international funds is primarily linked to regulatory limits on overseas investments rather than an AMC-specific decision, said Harsh Vardhan Dawar, ACA, CFA, FRM, Founder, Wealth Cafe.

SEBI permits Indian mutual funds to invest up to:

• US$7 billion collectively in overseas securities; and
• US$1 billion per mutual fund, within that industry-wide limit.

There is also a separate US$1 billion industry limit for overseas ETFs, with a maximum of US$300 million per mutual fund, he added.

For example, if an AMC has a US equity fund of funds (FoF), it will accept subscriptions until it reaches the applicable SEBI limits. If capacity becomes available later due to investor redemptions or a decline in the fund’s value, the AMC can reopen the scheme for subscriptions, he explained.

“An AMC starting fresh acceptances does not necessarily mean that it has become bullish on the market,” he added.

Which other international mutual funds are currently open?

Dawar said apart from these six funds, the Baroda BNP Paribas Aqua Fund of Fund is also open for subscription.

Funds such as Nippon India US Equity Opportunities Fund, Franklin India Asian Equity Fund, Franklin India Feeder – Templeton European Opportunities Fund, Kotak Global Innovation Fund and Edelweiss US Technology Equity FoF have intermittently opened and closed for lumpsum and SIP subscriptions, he added.

Should you invest just because an international fund has reopened?

The reopening of a global fund does not automatically make it a candidate for investment. Investors should first look at the asset allocation of their existing portfolio, Dawar said.

“In the equity portion of your portfolio, you should look at the global equity exposure with respect to US equity or emerging markets and then decide whether the fund that has opened for subscription fits into your portfolio allocation,” he said.

Broadly, investors keep between 10-25% of their total equity allocation to global investments, according to Dawar.

“Don’t fall for the fear of missing out (FOMO) just because a fund has opened for subscription,” he said.

Should you choose SIP or lumpsum for international funds?

For a retail investor, SIP should be the preferred investment route as it reduces the need to time the market. However, investors should also be prepared for a possible pause on their SIPs if the AMC decides to stop accepting investments, Dawar noted.

“If that particular global market/sector appears attractive from a valuation standpoint and the investor is sitting with cash allocation in the portfolio, lumpsum option can be considered,” he said.

There is another factor investors need to consider: currency exposure.

“One important factor to consider is the currency exposure the global fund is giving you because how the currency (say USD or EURO) moves vis-a-vis the INR will have a considerable impact on your total returns as an investor,” he said.