Global Mutual Fund - Definition, Benefits, Risk and Returns

The investment world in late 2025 has become truly borderless. While the Indian market has shown incredible resilience, savvy investors are looking toward Global Mutual Funds to capture opportunities that aren't available locally like the AI boom in the U.S. or the manufacturing cycles in East Asia. A Global Mutual Fund is a unique investment vehicle that spreads its wings across multiple countries, including India. By investing in these, you aren't just a local investor; you become a  World Investor.  At Motilal Oswal, we believe that true wealth creation requires looking beyond one's own backyard. With global markets offering diverse growth drivers, these funds act as a powerful tool to future-proof your portfolio against domestic slowdowns while giving you a slice of the world's most innovative companies.

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What is a Global Mutual Fund?

A Global Mutual Fund is a scheme that invests in companies across various countries around the world. It is often confused with an  International Fund,  but there is a subtle and important difference:

• International Fund: Invests only in countries outside of India.
• Global Fund: Invests in markets all over the world, including India.

Think of it as a  Universal Portfolio.  It seeks out the best companies regardless of where their headquarters are located. These funds can invest directly in foreign stocks or act as a  Fund of Funds  (FoF) that invests in successful offshore schemes.

Benefits of Going Global in 2026

Why should a Motilal Oswal investor consider global exposure today?

1. Massive Diversification

If the Indian market faces a temporary hurdle, a global fund helps cushion the blow. Since different economies (like the US, Europe, and India) operate on different cycles, your entire wealth isn't tied to the fate of a single nation.

2. Access to Global Leaders

India is great for banking and IT services, but what about the world's leading semiconductor makers or the pioneers of electric vehicles? Global funds let you own shares in giants like Apple, NVIDIA, or Alphabet (Google) brands you use every day but cannot buy directly on the NSE or BSE.

3. The Currency Advantage

When you invest globally, you are also investing in foreign currencies (like the US Dollar). If the Indian Rupee depreciates against the Dollar, your investment value in Rupees actually goes up, giving you an extra layer of profit.

4. Inflation Hedge

By spreading investments across regions with lower inflation rates or more stable currencies, you can protect the long-term purchasing power of your money.

Understanding the Risks

Global investing brings unique challenges that every investor should be aware of:

• Currency Fluctuations: While a falling Rupee helps, a strengthening Rupee can actually reduce your returns when converting your foreign gains back to INR.
• Geopolitical Risk: Trade wars, elections, or regulatory changes in foreign countries (like the US or China) can impact the fund's performance.
• Market Nuances: You may not be as familiar with a company in Germany or Japan as you are with one in India. This is why professional management is critical.

Performance and Returns (2025 Scorecard)

The year 2025 has been a standout for global categories. Driven by the massive surge in AI spending and tech innovation:

• Top Performers: Some global tech-focused funds have delivered returns as high as 30% to 40% in 2025.
• Diversified Average: Truly global diversified funds have seen a healthy category average return of around 28%, outperforming many domestic segments.
• Motilal Oswal's Reach: Schemes like the Motilal Oswal Nasdaq 100 ETF continue to be popular  engines  for capturing U.S. tech growth.

Taxation of Global Funds (2025-26 Rules)

For tax purposes in India, global mutual funds are treated as  Specified Mutual Funds  (non-equity):

• Short-Term Capital Gains (STCG): If held for 24 months or less, gains are added to your income and taxed at your applicable slab rate.
• Long-Term Capital Gains (LTCG): If held for more than 24 months, gains are taxed at 12.5% (as per the revised 2024-25 budget rules). Indexation benefits are no longer available for new investments.

How to Invest via Motilal Oswal

At Motilal Oswal, we've made international investing as simple as buying a domestic fund:

1. Open the App: Log into the Motilal Oswal Rise App.
2. Browse Global Options: Visit the ''US stocks' section to find funds that track the Nasdaq 100, S&P 500, or diversified world indices.
3. One-Click Investment: You can start an SIP or make a lump-sum payment in Indian Rupees. We handle the currency conversion and international regulations for you.

Conclusion

Global Mutual Funds are no longer extra additions; they are essentials for the modern portfolio in 2026. By reducing home bias and tapping into the world's most powerful economic engines, you ensure that your wealth is built on a foundation that spans continents. While they carry currency and geopolitical risks, the long-term benefits of diversification and access to global giants are unmatched. At Motilal Oswal, we provide the research and the platforms to help you navigate these markets with ease. By allocating even a small portion (10-15%) of your portfolio to global growth, you aren't just investing your future-proofing your dreams.