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Given that there are limited opportunities in India to invest in gold, real estate, commodities and other diversified sectors, such as semiconductors, e-commerce and aerospace, international funds provide a good platform to bet on such themes.
But global or international funds, which consist of direct as well as fund of funds, have continued to under-perform domestic funds over the last one year.
Aside from specific themes, these funds are also categorised based on geographies, such as the US, Brazil, China, Japan, Latin America and other emerging markets.
The Greek debt crisis, plunging commodity prices, the rout in gold and crude oil prices and the flaccid Chinese stock market have dragged the performance of global funds in the last one year. But there have been some bright spots, too. US-focussed funds, for instance, have delivered healthy returns.
Among the 40 schemes with international tag, four are new funds with less than one-year track records.
Others have clocked returns ranging from a negative 45 per cent to a positive 23 per cent.
Let us look at the laggards first. Gold prices have tumbled 17 per cent in the last one year.
The lacklustre performance of the yellow metal has rubbed off on gold-focussed funds.
DSP BR World Gold and Kotak World Gold, for instance, have lost over 41 per cent in the last one year.
Commodity prices of industrial metals, such as copper and aluminium, continue to extend their fall. Slowing Chinese growth has also kept metal prices under pressure.
China devaluing its currency, yuan, is likely to exert pressure on metal prices. DSP BR World Mining has plummeted more than 41 per cent in the past year.
Among the BRIC markets, Brazil, being a big commodity exporter, has seen a sharp slowdown due to the recent rout in global commodity prices. HSBC Brazil Fund has lost 44.5 per cent in the last one year.
GainersAmidst bouts of volatility across global markets, US focussed funds have managed to deliver good returns.
The depreciating rupee could also have boosted returns. Franklin India Feeder - Franklin US Opportunities, Birla Sun Life International, Kotak US Equity and DSP BR US Flexible Equity schemes have delivered returns between 9.5 and 23 per cent over the past one year.
Country-specific themes are prone to high volatility.
Investors looking to add international funds should tread cautiously.
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