Why you should take a closer look at international mutual funds
The top mutual funds that are doing well are the international funds. It would be a good idea to explore them further. The international market is doing wonders for those funds and you would have a higher probability of earning more than what you have invested. All experienced mutual fund planners and advisors recommend international mutual funds for investing. Reasons for the recommendations are:
1. Rising Food Inflation
We have all been witness to rising food prices in the international and well as domestic markets. The government might reassure us by saying that food prices will fall once again. However, one must understand that even if they do fall from their highs, they will still keep increasing. Reasons for this include the unreliability of the monsoons, supply side constraints and rising population. As the number of people increase, the need to accommodate them also rises. As a result, a lot of agricultural land is razed to construct residential and commercial spaces. Also, as the economy improves, pay scales rise and the standard of living improves. People have a higher purchasing power. Production of food, which is already in shortage, shrinks further. There is also an added burden of rising import costs of imported food items. This situation is may not be that pressing in India, but it is already an issue in other countries. If you invest in international agricultural business funds, your investments will, most likely, bear fruit.
2. Printing of money
Governments all over the world are printing more and more money in an attempt to resurrect their economies. Due to this, the value of their currency is eroding. As liquidity is increasing, investors are looking for places to park their funds. In the wake of economic uncertainty, investors tend to avoid risky investments such as equities and commodities and opt for safe haven investments such as gold and silver. Investment experts recommend this as an ideal time for Indian investors to invest in international silver and gold mining companies. You may thing this choice is risky, however, it is a long term investment plan where short term volatility would not be a concern.
3. The other side of the story
However, there is a flip side to this story too. When you are investing in an international mutual fund, you have to consider the prevailing exchange rate. Your returns will fluctuate according to changes in these exchange rates. So, it is not advisable to rely merely on these funds. At present, one must only invest his surplus money in these funds.