Global Investment Opportunities: Best International Mutual Funds to Consider for 2025

This interconnectedness is evident in how global monetary policies, trade relations, and geopolitical tensions influence Indian equity and debt markets. With mutual funds in India offering avenues to invest in international markets, a growing number of investors are leveraging these schemes to diversify their portfolios and mitigate domestic risks.

The Indian economy, being one of the fastest-growing major economies, shares a symbiotic relationship with the global economic landscape. While India benefits from foreign direct investments and robust exports, it is also susceptible to global shocks such as rising oil prices, geopolitical conflicts, and trade disruptions.

This duality underscores the need for Indian investors to broaden their horizons and include global opportunities in their investment strategy. By investing in international mutual funds, they could capitalise on the growth of global giants while balancing the volatility of the domestic market.

Protectionist Policies under Trump 2.0

The inauguration of Donald Trump as the 47th President of the United States for a second term has ushered in a wave of speculation and debate surrounding the future of global economics and geopolitics. Building on his earlier 'America First' mantra, Trump 2.0 promises to amplify the protectionist policies that were hallmarks of his first term as he continues his quest to 'Make America Great Again' (MAGA).

[Read: How Donald Trump's Victory Would Playout On the Indian Equity Market]

From the withdrawal of the U.S. from international agreements to a recalibration of trade relations, these moves have far-reaching implications. Moreover, his executive orders passed on Day 1 of his second term signal an aggressive approach to reshaping domestic and international policies.

President Trump's return to the Oval Office has been marked by the rapid rollout of executive orders targeting various sectors. One of the most notable actions includes the withdrawal from the Paris Climate Agreement, which underscores his administration's prioritisation of domestic economic growth over global environmental commitments. Additionally, his focus on ending the 'Work from Home' culture aims to reinvigorate traditional business hubs and bolster economic activity within the U.S.

Protectionism remains a cornerstone of Trump's economic strategy. His policies are designed to encourage domestic manufacturing and reduce dependency on foreign imports. Tariffs on Chinese goods, a legacy from his first term, are expected to either remain or even increase, potentially heightening trade tensions between the world's two largest economies. Similarly, his administration's emphasis on renegotiating trade deals could lead to a more fragmented global trade landscape.

Global Economic Repercussions

The Trump administration's protectionist stance is likely to have significant consequences for global trade and economic growth. By prioritising domestic industries, Trump 2.0 may create barriers for international exporters reliant on U.S. markets. For instance:

• Trade Tensions: Heightened tariffs on Chinese goods could escalate into a full-blown trade war, disrupting global supply chains and leading to increased production costs worldwide.

• Market Volatility: Protectionist policies often result in market uncertainty. Businesses and investors may delay decisions amid fears of sudden policy shifts or retaliatory measures from other nations.

• Global Cooperation: By withdrawing from international agreements and focusing on unilateral actions, the Trump administration risks alienating allies, weakening global institutions, and reducing collaborative efforts to address global challenges.

[Read: Is It Worthwhile Adding International Mutual Funds to an Investment Portfolio?]

Is It an Opportune Time to Invest in International Mutual Funds?

Given the uncertainty surrounding Trump's policies and their global implications, diversification remains a prudent investment strategy. International mutual funds offer Indian investors an opportunity to hedge against domestic economic risks while tapping into global growth opportunities. While Trump's protectionist policies may introduce volatility in certain markets, they also create sectoral opportunities, particularly in technology, healthcare, and green energy in non-U.S. regions.

Key Considerations for Investing in International Funds:

1. Market Selection: Prioritise funds with exposure to regions less impacted by U.S. protectionist policies, such as Europe, Japan, or emerging markets.

2. Currency Dynamics: A weakening rupee can amplify returns from international investments, making these funds particularly attractive during periods of domestic currency depreciation.

3. Sectoral Focus: Technology and innovation-driven sectors continue to outperform globally, offering robust growth potential.

4. Risk Management: International funds come with currency and geopolitical risks. Diversify across geographies to mitigate these challenges.

Investors should also consider the long-term trends that may offset the short-term impacts of Trump's protectionist policies. For instance, advancements in green technology, the digital economy, and healthcare innovation are reshaping global markets. Funds that focus on these themes, particularly in regions such as Europe and Asia, offer compelling growth opportunities.

Moreover, the rise of bilateral trade agreements and the strengthening of regional alliances like the European Union and ASEAN could present investment avenues less susceptible to U.S. policy shifts. Funds aligned with these developments can provide a hedge against the risks posed by U.S.-centric protectionism.

Investing in global mutual funds may help balance domestic risks and tap into the resilience and growth potential of other economies.

Among the funds focusing on U.S. equities, Mirae Asset NYSE FANG+ ETF FoF stands out with the highest absolute returns of 28.13% over six months and a staggering 69.14% over a one-year period. This reflects the outperformance of tech-heavy portfolios amidst market recovery.

Similarly, funds like Mirae Asset S&P 500 Top 50 ETF FoF and Motilal Oswal Nasdaq 100 FoF have delivered impressive returns, showcasing the resilience and growth potential of large-cap U.S. equities, particularly in the technology and innovation sectors. The robust performance underscores the attractiveness of these funds for diversification and capital appreciation.

When compared to benchmarks like the NIFTY 500 TRI and S&P BSE Sensex, which delivered one-year returns of 34.52% and 22.22%, respectively, the top-performing U.S.-focused funds have generally outpaced domestic indices, especially over the shorter term.

Notably, funds like Invesco India - Invesco Global Equity Income FoF and Motilal Oswal S&P 500 Index Fund have maintained steady performance, with long-term returns aligning closely with global indices such as the NASDAQ 100 and S&P 500.

#1 - Mirae Asset NYSE FANG+ETF FoF

The scheme focuses on replicating the performance of the NYSE FANG+ Index, a tech-centric index comprising ten highly traded growth stocks, including prominent names such as Facebook (now Meta), Apple, Amazon, Netflix, and Google (Alphabet), along with other tech-driven giants like Tesla and Nvidia.

This fund offers Indian investors a unique opportunity to participate in the growth story of some of the world's most influential and innovative companies driving the global digital and technological revolution. The fund's performance has been remarkable; this impressive growth highlights the strong rebound and continued dominance of the tech sector, especially in a post-pandemic recovery phase marked by digital transformation and high demand for innovative technologies.

However, as the fund invests in a concentrated portfolio, it is inherently more volatile and carries a higher risk profile compared to broader-based funds. Investors should approach this scheme with a long-term perspective, understanding its potential to deliver high returns alongside market fluctuations.

#2 - Mirae Asset S&P 500 Top 50 ETF FOF

The scheme provides Indian investors with an opportunity to diversify their portfolio by investing in the top 50 companies of the United States' S&P 500 Index. This fund-of-fund invests in the units of the Mirae Asset S&P 500 Top 50 ETF, which directly tracks the performance of the S&P 500 Top 50 Total Return Index, representing the largest companies by market capitalisation from the broader S&P 500.

It is a simple and effective way to gain exposure to global giants like Apple, Microsoft, Amazon, and Alphabet, which dominate the global economy and technology sector. The fund caters to investors seeking global diversification beyond Indian equities.

Additionally, the U.S. dollar-denominated exposure can act as a hedge against rupee depreciation. However, being an FoF, it carries currency risk, expense layering, and could underperform Indian equity-focused funds in times of rapid domestic market growth. Investors should consider their risk tolerance, financial goals, and investment horizon before adding this fund to their portfolio.

#3 - Kotak NASDAQ 100 FOF

Launched in February 2021, the scheme invests in the iShares NASDAQ 100 ETF, which tracks the performance of 100 of the largest non-financial companies listed on the NASDAQ Stock Exchange.

With a portfolio dominated by tech behemoths like Apple, Microsoft, Amazon, and Tesla, the fund offers a unique opportunity to capitalise on the growth of innovative global businesses across sectors such as technology, healthcare, and consumer services. Do note the NASDAQ 100 Index has historically exhibited higher volatility due to its tech-heavy composition, which can lead to sharp corrections during periods of global market turbulence.

It is well-suited for those with a higher risk appetite and are looking to participate in the long-term growth potential of global leaders driving digital transformation, AI, cloud computing, and renewable energy solutions. However, investors should be mindful of currency fluctuations, as the fund's performance is directly influenced by the movement of the Indian Rupee against the US Dollar.

#4 - Invesco India - Invesco Global Equity Income FoF

The scheme is an international equity-oriented mutual fund designed to provide investors with a steady stream of income and potential capital appreciation by investing in global markets. The fund predominantly invests in the units of Invesco Global Equity Income Fund, which is managed by Invesco's global team of seasoned professionals.

The underlying fund adopts a dividend-focused approach, targeting high-quality, dividend-paying companies across developed and emerging markets. This approach makes the FoF particularly appealing to investors looking for regular income along with the diversification benefits of international equity exposure.

By leveraging Invesco's global expertise, the FoF enables Indian investors to gain access to sectors and industries that may not be well-represented in the Indian equity market, such as global technology, healthcare, and consumer goods. Being a feeder fund, it is important to note that it carries risks associated with currency fluctuations, geopolitical uncertainties, and international market dynamics.

The fund is suitable for investors with a medium to long-term investment horizon who wish to diversify their portfolio beyond domestic markets. Investors should carefully assess their risk tolerance and financial goals before considering this fund.

#5 - SBI International Access-US Equity FoF

Launched in March 2021, the scheme offers Indian investors the opportunity to gain exposure to the United States' equity markets by investing in a global fund. This fund predominantly invests in the Amundi Funds - US Pioneer Fund, which focuses on high-quality, growth-oriented stocks listed in the US.

This fund-of-fund structure eliminates the complexities of direct international investing, such as managing foreign currency accounts and compliance with overseas regulations. It also enables Indian investors to benefit from the growth potential of the US economy, home to leading companies in sectors like technology, healthcare, and consumer goods.

By leveraging the expertise of global fund managers, the scheme seeks to provide long-term capital appreciation, making it a suitable choice for investors looking to diversify their portfolios across geographies.

To conclude...

The year 2025 presents an exciting opportunity for investors to tap into the growth potential of global markets. As the world continues to recover from recent economic disruptions, countries with robust economies and dynamic industries- such as the U.S., Europe, and emerging markets- are well positioned for robust growth.

By carefully selecting funds focused on various sectors and regions, investors can strategically position themselves to benefit from global economic trends and innovations, particularly in technology, healthcare, and green energy. Global diversification across different economies allows investors to not only broaden their growth opportunities but also protect their portfolios from market-specific downturns.

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MITALI DHOKE is a Research Analyst at PersonalFN. She is an MBA (Finance) and a post-graduate in commerce (M. Com). She focuses primarily on covering articles around mutual funds including NFOs, financial planning and fixed-income products. Mitali holds an overall experience of 4 years in the financial services industry.
She also actively contributes towards content creation for PersonalFN’s social media platforms in the endeavour to educate investors and enhance their financial knowledge.
 

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.
This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.