Invest in global funds to earn returns out of rupee exchange fluctuations

Even if the foreign markets are not performing well, you can derive profits based on the rupee exchange fluctuations. You would have earned more than 14 percent returns now if you made investments when rupee exchange rate stood at Rs 70 against dollar. Thus we can safely park our funds abroad by subscribing to global plans offered by our own mutual fund firms. What benefits such investments yield makes an interesting read, financially.

Hyderabad: Better returns can be earned only by making diverse investments where international funds come up as an attractive proposition. By investing in international funds that track the American indices, we can derive better returns out of rises and falls in currency exchange values. The rupee has no big value when considering investments made in indigenous markets. But when investing in America, the exchange value becomes a key factor. There will be higher returns on investments in international funds once the rupee value erodes.

For example, you would have earned more than 14 per cent returns now if you made investments when the rupee exchange rate stood at Rs 70 against the dollar. Even if the American markets are not performing well, we can get profits based on fluctuations in the rupee exchange rate. Without confining to one plan or market, we should choose a variety of plans. Those looking for long-term investments can choose the mutual funds that invest a certain percentage of their funds in foreign markets as well, despite India's growth rate being optimistic.

The dynamics of stock markets differ from country to country. To understand this, we should look at that particular country's economy, its government policies and the geo-political factors that largely drive their stock markets. Some markets look very attractive while others hit a declining trend. Even in stable economies, corrections become necessary sometimes. For example, the American markets slid from a peak to a steep low of 32 per cent recently while the Indian small and midcap indices did not decline that much. We should watch such factors carefully before forming our investment strategies.

Indian mutual fund firms are by themselves offering global funds. Almost all mutual funds are coming out with such plans. Before investing, we should take up a study in which markets a particular mutual fund is investing. These investments can be made online or through the mutual funds' management department or an advisor. Average benefit can be drawn by investing in systematic investment plans (SIPs). Lumpsum investments can be made. SIPs are preferable to the maximum possible extent.

International funds help in dispersing our investment portfolio to different geographical regions. They will do away with the necessity for an investor to confine to one single country. These global funds will also reduce the risk of loss. This diversity will not be available if funds are put in one single market. We can create wealth by scattering funds to different plants. When you invest abroad, the pattern of returns would be different. Diverse plans in your portfolio will help you in taking a bite into profits yielded by foreign markets.

It can be said that compared to our economic system, some foreign markets are far better developed. Those buoyant foreign markets provide a wide variety of investment plans and business opportunities which are not available in our system. To access such benefits abroad, we can go for international funds, which will turn indigenous shareholders into global investors.