Overseas funds

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: entails. Also, the presence of the local fund manager, who adds a domestic perspective to investment decisions, add to the overall value enhancement of these funds. Before investing in a fund of funds, the indirect way of investing, you need to take into account the fact that the launched funds need to show their track record in its offer document. To be precise, you need to have a record of the information of deployment of money of the fund having an overseas focus.

However, if there is no track record made available to you, it may present a narrow view of the fund and it would amount to a riskier investment considering the money, currency and other returns-impacting parameters. The reason is you cannot track the portfolio and the sector where the fund would invest and also the new overseas fund would involve the additional cost involved in setting up of the fund and marketing expenses, all of which add to costs involved in overseas investing.

Hence, it makes sense to invest in funds, which have a proven track record, have delivered decent returns and is multi-focussed. The reason being a display of information increases transparency of the fund and it gives substantiated arguments, which in turn would give you adequate confidence irrespective of whether the fund is country-focussed or has international exposure.

Apart from track record factor, you also need to focus on the asset allocation factor before investing in a fund having overseas exposure. The returns and the correlation of the fund with the domestic-focus fund also depend on the asset allocation between overseas and domestic in regard to your portfolio construction. This would give you a clearer picture, whether the investment is a good diversification strategy or not. Also, the proportion factor plays an important role in choosing a fund having overseas focus.