As the name suggests, MNC Funds invests in joint ventures and MNCs. With globalization and privatization taking place in the last decade or so, these types of funds has gained a lot of attention from the investors. If you are still not sure about in these funds, keep reading to find out more.
Last few years have seen Multi-national Corporation (MNC) Funds showing better returns compared to diversified equity funds. Preferred by the Investors during the light years, the MNC Funds have been improving, despite the towering quotation of MNC companies. Are you familiar with the risks carried by these funds? Or, are they competent enough of being compared to other methodical sector funds?
MNC funds invest in multinational firms and in stocks that support prohibitive Foreign Institution Investor holdings. These are some of the reasons behind the appreciation that these funds are gaining. The prominent reason can be the adequate funding by the foreign parent, because of which these funds are high in cash and little on debt. Read ahead and decode the MNC Funds in depth.
Being an investor in MNC Fund, you would have to often withstand the valuation risks. Just because these funds are cash rich, they incline towards high-cost trading. Moreover, if the growth of earnings in these funds fails to keep pace with estimates, then it may lead to volatility in the stocks.
Another reason behind the instability of these stocks can be an extensive royalty payment to the nurturing company from time to time. This is more likely to bring down the prices. On the top of it, the rumors of delisting may increase the prices of the stocks as investors tend to act from the fake rumors.
These funds are more diversified as compared to sector funds because they possess a broad range of areas. Moreover, by holding both growth and defensive sectors, they get an opportunity to select the segments according to the market conditions. However, if you are considering investing in these funds, then it is recommended to invest through Systematic Investment Plans.
Apart from all the limitations, Multi-national Corporation Funds also hold some strong fundamentals that make them a good option for the investment purpose. The MNC companies cater to the demands from the domestic as well as the foreign markets. Not just that, by receiving the technological and technical support from the parent, the Indian units of MNCs are better in terms of quality as well as the cost efficiency.
Is It For You?
Investing in MNC Fund is appropriate only if you are looking for long-term capital growth. Also, if you primarily want to invest in the equity and similar securities of the MNCs, then you can go for it.
So, these are few of the aspects of MNC Funds. If you are skeptical about any feature, risk, or advantages, it is better to contact your financial advisor and know whether or not these funds are for you. Having a full knowledge before investing your hard-earned money is always better than regretting later. So, take the step cautiously.
Mutual Fund investments are subject to market risk. Please read the offer document carefully before investing.