International Funds: At present, the global markets are volatile. But through global investing, you can not only include foreign companies in your portfolio but can also take full advantage of the growth coming in them. Global investing can help an investor to take advantage of diversification. For this, International Fund is a better option. At a time when opportunities in the domestic market are limited, International Funds are a great way to participate in investment opportunities across the globe and generate profits. Ajit Menon, the CEO, of PGIM India Mutual Fund, has given his opinion about what are the advantages of International Funds, what are the alternatives.
Benefits of Investing in International Funds
International funds can help you gain exposure to such unique or new-age or futuristic business models, which are very less available in India. For example, you can take luxury goods, health tech, and electric vehicle. There are very few options in India to invest in such services or this type of business. Asset class like REITs is also not very well developed in India. Investments in REITs also diversify the portfolio as they may perform differently from equities in different economic scenarios.
Which theme will perform better
Ajit Menon says that themes like an electric vehicle, e-commerce, semiconductor, and REITs are looking better. The major reason for this is that they are structural and they have a long way to grow. Further high growth can be seen in the electric vehicle segment. Similarly, e-commerce companies could be another growth area, driven by increasing adoption and internet penetration, especially in emerging markets. Semiconductors, being a critical component of the ongoing digitization, can be a beneficiary.
He says that when it comes to PGIM India, the International Equity Fund of the fund house is focusing on investing in companies which are in the early stages of accelerating their growth. Growth stocks have historically done well during rate hike cycles. Growth stocks can further emerge as market leaders. In addition, earnings growth continues to be strong for growth stocks as represented by the Russell 1000 Growth Index.
Real estate better theme
Talking about real estate, listed REITs have shown more reaction to the macro-environment. As interest rates rise, it may be difficult for highly leveraged buyers to finance the transaction. As a result of which real estate M&A activities slow down. On the other hand, higher rates may allow greater pricing power for the landlord. Reflection has historically been good for real estate and REITs. Many companies continue to post strong top-line growth due to low occupancy and lacklustre demand.
