International mutual funds are trending amid the bull run

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  • Investment in international markets have increased through the mutual fund route.
  • Retail investors contribute 22% to the overall Fund of Funds investing overseas assets under management (AUM) while HNIs contribute 62%.
  • AUM of Funds of Funds, mutual funds investing in international funds, have grown 7 times since March 2021.

While investment in foreign markets have evidently gone up in recent years with the increasing investment platforms that provide easy access to overseas stocks like in the US, the mutual fund route to invest in foreign markets have also gained traction.

Fund of Funds (FoF) investing overseas are mutual fund (MF) schemes that invest in international schemes of mutual funds instead of directly investing in equity or bonds.

The latest data by Association of Mutual Funds in India (AMFI) show a sharp increase in such funds investing in overseas mutual funds. The assets under management (AUM) of Funds of Funds investing overseas grew by 643% in the period between March last year to July 2021.

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This shows how investors’ ability to diversify their investments has grown.

Flourish chart/AMFI

Moreover, the majority of investors invested in Fund of Funds investing overseas are high net worth individuals (HNIs) followed by retail investors.

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About 62% of investors were HNIs and 22% were retail investors.

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Flourish chart/ AMFI

There are 37 FoFs schemes in the industry with overall 9.79 lakh mutual fund folios. A folio number in a mutual fund is a unique number allotted to each mutual fund investor similar to a bank account number.

The industry has added 7.89 lakh new folios since March 2020 which as of July 2021 stood at 9.79 lakh.

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Flourish chart/AMFI

With the growing investment trends in global markets, investors are now more attracted towards foriegn stocks through mutual funds or investment platforms that allow direct investment in overseas stock markets.

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