FUND FULCRUM

April 2016

Investors pulled out over Rs 73,000 crore from various mutual fund schemes in March 2016, primarily due to high redemptions in liquid funds. Despite this, mutual fund schemes saw a net inflow of Rs 1.34 lakh crore in 2015-16. In comparison, mutual funds had witnessed an inflow of Rs 1.03 lakh crore in the preceding financial year. According to the data from the Association of Mutual Funds in India (AMFI), total redemptions from mutual fund schemes stood at Rs 73,113 crore in February 2016 as compared to Rs 1,09,897 crore in March 2015. The latest outflow was mainly driven by contribution from liquid or money market segment. Besides, income segment too witnessed outflow. Liquid or money market segment witnessed redemptions to the tune of Rs 58,605 crore last month, while income segment saw net outflow of Rs 14,048 crore. In addition, equity funds saw net outflow of Rs 3,206 crore. Overall, the asset base of the country's fund houses stood at Rs 13.53 lakh crore in March 2016 from Rs 11.88 lakh crore at the end of March 2015.

Equity mutual funds witnessed an outflow of Rs 1,370 crore in March 2016, making it the first pull out in two years amid profit booking. Fund managers invested Rs 74,024 crores in the equity mutual funds in the entire fiscal ended March 31, 2016. According to data with the Association of Mutual Funds in India, equity and equity-linked saving schemes saw a net withdrawal of funds to the tune of Rs 1,370 crore. This was the first outflow since March 2014, when equity mutual funds had witnessed a pull out of Rs 1,935 crore. Prior to the latest outflow, equity mutual funds have seen a slowdown in the inflows. Equity schemes received funds worth Rs 2,522 crore in February 2016, lower than Rs 2,914 crore in January 2016 and Rs 3,644 crore in December 2015. However, in 2015, equity mutual funds saw an average monthly inflow of Rs 7,550 crore. Despite huge outflow in March 2016, mutual funds registered a big net inflow of Rs 74,024 crore in the financial year 2015-16. In comparison, fund managers invested a net sum of Rs 71,029 crore in 2014-15. 

Showing a growing traction for mutual funds among investors, the number of folios have grown by over 59 lakh last fiscal, primarily on account of robust contribution from smaller towns. This follows an addition of 22 lakh folios or investors' accounts in the preceding financial year (2014-15). According to the Securities and Exchange Board of India (SEBI) data on investor accounts with 43 fund houses, the number of folios jumped to a record 4,76,63,024 in February 2016 from 4,1,740,206 in March 2016, a gain of 59.23 lakh. For a long time, investors accounts were not going beyond 2 crore. Out of 59 lakh folios added last financial year, more than 25 lakh have come from towns beyond top-15 cities. Besides, equity folios witnessed an addition of over 43 lakh to 3.60 crore folios. Mutual funds have reported net inflows of Rs 1.34 lakh crore in total schemes. Equity and equity-linked saving schemes alone account for over Rs 74,000 crore in the total inflows helping the industry grow the folio count. Interestingly, smaller towns have contributed 44% of such inflows. 

Piquant Parade

SEBI’s latest data on ‘Status of Mutual Fund Applications’ as on March 1, 2016 shows that Yes Bank, Fortune Financial Services & Credit Capital, Trust Investment Advisors, and Karvy Stock Broking are awaiting approval from SEBI to launch mutual fund business in India. While Yes Bank and Fortune Financial Services & Credit Capital have approached SEBI in November 2015 and June 2015 respectively, Trust Investment Advisors had applied for a license in September 2014. Karvy Stock Broking is waiting to get in-principle approval from SEBI since five years. It had applied for AMC license in November 2011. Interestingly, all four companies have a mutual fund distribution arm. AMFI data shows that Yes Bank, Trust Investment Advisors and Karvy Stock Broking have assets under advisory (AUA) of Rs.678 crore, Rs. 1,115 crore, and Rs. 5,056 crore respectively as on March 2015. The AUA details of Fortune Financial Services are not available in the AMFI’s list of top 500 distributors. 

The Competition Commission has approved Japanese financial services major Nomura's 35% stake sale in the mutual fund business jointly run with LIC. Under the deal, Nomura Asset Management Strategic Investments PTE will sell its stake in LIC Nomura Mutual Fund AMC and LIC Nomura Mutual Fund Trustee Company. 

MF Utility has bagged ‘The Annual Globe Tigers 2016 Award’ for the best industry infrastructure initiative in the financial services category. The company has been awarded for bringing innovation in the financial services industry. The Golden Globe Tigers Award aims to recognize "TIGERS" in marketing, branding CSR and social innovation, education and academic across leadership levels in individual and organization. Launched in January 2015, MF Utilities is an initiative by AMFI to aggregate transactions in the mutual fund industry in order to bring in scalability and remove duplication of activities. It enables distributors and direct investors to open a single account called CAN to invest in multiple schemes. So far, more than 34,000 CANs have been opened by the investors. The company claims that over 1,000 distributors are using MF Utilities to execute transactions.

Regulatory Rigmarole 

Salaries of AMC officials earning Rs. 60 lakh per annum and above in FY 2015-16 will be uploaded on their respective websites by April 30, 2016. SEBI said that AMCs/MFs should disclose this information within one month from the end of the respective financial year (effective from FY 2015-16). SEBI believes that this move will improve transparency in remuneration policies so that executive remuneration is aligned with the interest of investors. 

The Securities and Exchange Board of India (SEBI) has rejected a mutual fund industry proposal to allow them to keep apart risky assets from the rest of their holdings and cap redemption, mentioning that it will motivate fund managers to take unnecessary risks. In March 2016, the Association of Mutual Funds of India (AMFI) approached the capital market regulator to provide rules for the creation of a so-called side pocket when a specific investment faces a credit risk as a way to insulate the broader portfolio from redemption pressure. JP Morgan Asset Management (India) Pvt. Ltd followed this concept last year even though there were no clear guidelines in place.

AMFI has communicated to distributors that from May 1, 2016 only National Automated Clearing House (NACH) mandate forms would be accepted. The new system will replace ECS forms. NACH was supposed to be implemented from March 1, 2016 but National Payments Corporation of India (NPCI) at the behest of AMFI extended this deadline to May 1, 2016. NPCI is an umbrella organization for all retail payments system in India. Taking into account the lead time required for NACH process, AMFI has asked distributors to use only NACH forms from April 20 for registering new SIP mandates. Distributors can collect NACH forms either from AMC offices or their websites. For new SIP registrations, ECS forms will be rejected after April 20, 2016. Existing ECS mandates would continue to be operative till the validity of the mandate. AMFI has said that the current SIP registration process would remain the same. Instead of ECS forms, distributors will now have to collect NACH forms from clients. NACH does not replace existing direct debit arrangements some AMCs may have with clients. As of now, registering a SIP through ECS mandate, takes up to 30-35 days. However, most banks, especially private sector banks issue mandates within 15-20 days. With NACH, the turnaround is expected to reduce to only up to 10 days as banks have to answer within T+5 days to confirm the transaction. Also, NACH is cost effective as compared to ECS as it entails less paperwork. NACH can help investors and distributors in a big way. Earlier, distributors had to register multiple mandates if their clients wanted to invest through SIP in say, four different schemes. With the new system, distributors can register four SIPs through one mandate. The process has become simpler even in case of lump sum investments. NACH can be also utilized to pay utility bills and insurance premiums. NACH is a one-time registration process which gives flexibility to investors to invest lump sum and through SIP without having to make individual payments each time.

In order to curb mis-selling of third party products by banks, RBI has introduced sweeping changes in the way banks sell mutual funds and insurance schemes in its guidelines on investment advisory services of banks. RBI has mandated banks to register with SEBI under Registered Investment Advisor (RIA) norms to distribute third party products like mutual funds. The banking regulator has clarified that banks will have to segregate other departments of the bank and the investment advisory services of banks. It has asked banks to form a subsidiary to offer such services and instructed them to maintain an arm’s length distance between banks and its investment advisory subsidiary. Further, RBI has instructed banks to adhere to KYC in accordance with their respective regulators to distribute third party products. “Mis-selling raises serious consumer protection issues. Further, as observed from the recent allegations, wealth management activities as well as marketing third party products can expose banks to serious reputational risks. Bank employees were directly receiving incentives from third parties such as insurance, mutual fund and other entities for selling their products,” stated the draft released on June 28, 2013. RBI has given bank a time-frame of three years to banks to comply with these norms.

Following SEBI’s diktat, the mutual fund industry will start contributing one basis point of AUM to AMFI from April 2016. AMCs are supposed to give 50% of their IAP fund in the first week of every month to AMFI, i.e. they will hand over the IAP corpus accumulated in April in the first week of May. Also, AMCs have already shared 50% of the unspent IAP corpus accrued till March 2016 to AMFI. Based on AUM of Rs. 12.32 lakh crore as on March 2016, AMFI will have Rs. 123 crore to invest in creating awareness about mutual funds this year. This means the industry body will get Rs. 10 crore every month from the industry. With this sizeable budget at AMFI’s disposal, its committee on financial literacy is expected to discuss the ways to promote mutual funds at the industry level on a bigger scale.

NFO NEST

April 2016

NFOs with hindi names to tap the rural market

Several mutual fund companies have approached SEBI for launching plans with Hindi names so that investors in rural areas understand the objectives of the schemes in a better manner. The move is seen as moving away from the old tradition of English names for investment schemes. 'Bal Vikas Yojana', a scheme aimed at saving for children's future, Kar Bachat Yojana, a tax saving fund, 'Bachat Yojana' and 'Nivesh Lakshya' both fixed income schemes, are some of the mutual fund schemes with Hindi names, filed with SEBI by Mahindra Mutual Fund and Reliance Mutual Fund.

There is a dearth of NFOs in the April 2016 NFONEST.

ICICI Prudential India Recovery Fund – Series 5
Opens: April 18, 2016
Closes: May 2, 2016

ICICI Prudential Mutual Fund has introduced a close ended growth fund, ‘ICICI Prudential India Recovery Fund-Series 5’. The investment objective of the fund is to provide capital appreciation by investing in equity and equity related securities that are likely to benefit from recovery in the Indian economy. The fund’s erformance will be benchmarked against S&P BSE 500 Index and its fund managers are George Heber Joseph, Atul Patel, and Shalya Shah.

Reliance Dual Advantage Fixed Tenure Fund IX – Plan C

Opens: April 20, 2016Closes: May 2, 2016

Reliance Dual Advantage Fixed Tenure Fund IX – Plan C is a hybrid debt-oriented conservative closed-end fund. The fund seeks to generate returns and reduce interest rate volatility, through a portfolio of fixed income securities that are maturing on or before the maturity of the fund along with capital appreciation through equity exposure. The fund is benchmarked against the CRISIL Composite Bond (80%) and Nifty 50 (20%). The fund managers are Anju Chajjer and Sanjay Parekh.

UTI Capital Protection Oriented Fund – Series IV-VII

Opens: April 20, 2016Closes: May 4, 2016

UTI Capital Protection Oriented Fund – Series IV-VII (1278 days) is a close-ended capital protection-oriented fund. The fund endeavors to protect the capital by investing in high quality fixed income securities as the primary objective and generate capital appreciation by investing in equity and equity related instruments. The fund is benchmarked against the CRISIL MIP Blended Index. The fund managers are Sunil Patil and V. Srivatsa.

DHFL Pramerica Money Market Fund, UTI-Retirement Benefit Pension Fund -Wealth Maximiser Plan (WMP) and Income Generator Plan (IGP), ICICI Prudential Liquid ETF, Sundaram Select Micro Cap Series XI-XIII, Mahindra Bal Vikas Yojana, Mahindra Liquid Fund, Reliance Nivesh Lakshya Fund, Franklin India Retirement Solution Fund, Reliance Korea Equity Fund, and Mahindra Mutual Fund 'Kar Bachat Yojana' are expected to be launched in the coming months. 

GEMGAZE

April 2016

Global and International funds have exhibited subdued performance in the past year. Within the international category, investors have a few choices and they need to look at the country and theme to assess if a particular fund is suitable.

GEMGAZE enables you to do exactly this. The five sparkling GEMs among the global equity funds in India in 2015 have retained their preeminent status in 2016 also.

Principal Global Opportunities Fund Gem

Principal Global Opportunities Fund is an open-ended balanced fund of fund launched by Principal Financial Group (Mauritius) Limited. The fund is managed by Principal PNB Asset Management Company Private Limited. It invests in funds which invest in the public equity and fixed income markets across the globe. Launched in March 2004, Principal Global Opportunities Fund is the oldest global fund in India. With an AUM of Rs 16 crores, Principal Global Opportunities Fund has earned a one-year, three-year, and five-year returns of -13.37%, -0.86%, and 1.33% respectively. Being a feeder fund, the performance of the fund depends entirely on Principal Global Investors – Emerging Market Equity. 98.64% of the portfolio is in equity, predominantly mid and small cap stocks. The fund is benchmarked against the MSCI World Index. The expense ratio is 0.79% and the portfolio turnover ratio is 10%. The fund has been managed by Mr. Rajat Jain since inception.

Templeton India Equity Income Fund Gem

Templeton India Equity Income Fund is a multi-cap fund which invests your money in companies that have a currently or potentially attractive dividend yield across market caps both in India and overseas. Although it can invest up to 50% of its assets in foreign equity it has never exceeded the 35% limit so far. The portfolio has 48% exposure to large cap companies, 41% exposure to mid-cap companies and 11% exposure to small cap companies. Large cap companies are stable in returns compared with mid cap and small cap companies. However it is the small and mid cap companies that have huge prospects of bumper returns. With an AUM of Rs 829 crores, the one-year return of the Templeton India Equity Income Fund is -8.24% as against the category average of -9.84%. The fund is managed by renowned fund manager Dr. J Mark Mobius and assisted by Chetan Sehgal and Vikas Chiranewal. The fund’s philosophy is investing in growth stocks trading at a significant discount to their earnings potential. The team prefers issues that are cheaper than their peers, the broader market, and historical valuations. Therefore, in-depth research is core to the process. While evaluating companies, both qualitative and quantitative factors are considered. For this fund, foreign equities comprise roughly 30% of the portfolio. The team follows a similar approach for picking foreign stocks but typically scouts for companies in sectors that may not be well established in India. Stocks are identified by assessing price in relation to the intrinsic value through an analysis of cash flows, earnings, and asset value. Three features make the fund stand out from peers: value, bargain hunting, and long-term orientation. The fund is benchmarked against the S & P BSE 200. The expense ratio of the fund is 2.56% and the portfolio turnover ratio is 1%.

DHFL Pramerica Top Euroland Offshore Fund Gem

Deutsche Mutual Fund had changed the name of DWS Invest Global Thematic Offshore Fund, launched in September 2007, to DWS Top Euroland Offshore Fund w.e.f. January 9, 2014. The underlying fund was changed to DWS Invest Top Euroland, a Germany-based fund. The feeder fund was earlier investing in DWS Invest Global Thematic Fund based in the US. The fund's benchmark was changed from MSCI World Index to EURO STOXX 50. DHFL Pramerica Mutual Fund has agreed to take over Deutsche Mutual Fund’s (DWS) schemes and the corresponding change in the sponsorship, trusteeship, management, and administration of the same. Accordingly, the DWS has announced change in 10 of its funds with effect from March 4, 2016. The name of DWS Top Euroland Offshore Fund has been changed to DHFL Top Euroland Offshore Fund. DHFL Pramerica Mutual Fund has changed the benchmark of DHFL Pramerica Top Euroland Fund from EURO STOXX 50 to MSCI EMU Index with effect from March 8, 2016. The India-based fund allocates 95-100% of its assets to units of the overseas fund. Its allocation to debt instruments in the domestic money market stays between 0 and 5%. With an AUM of a mere Rs 20 crores, DHFL Pramerica Top Euroland Offshore Fund has earned one-year, three-year, and five-year returns of -9.29%, 3.86%, and 5.56% respectively. There has been a reversal of fortunes in the three-month period with the return at -4.19%. The expense ratio of the fund is 2.04% and the portfolio turnover ratio is 5%. The fund managers are Kumaresh Ramakrishnan since July 2007 and Akash Singhania since December 2012.

Sundaram Global Advantage Fund Gem

Sundaram Global Advantage Fund was launched in August 2007. The fund has an AUM of Rs 21 crores. Sundaram Global Advantage Fund has earned a one-year, three-year, and five-year returns of -14.43%, -2.43%, and 0.66% respectively.  The fund has invested in 10 foreign equity mutual funds, with Fidelity South East Asia and DB Tracker Emerging Markets Asia being the top two funds. 97.69% of the fund’s assets are in equities with the rest in cash. The fund is benchmarked against the MSCI Emerging Markets Index. The fund managers are Mr. Avinash Agarwal since January 2016. The expense ratio of the fund is 1.63%.

ICICI Prudential Indo Asia Equity Fund Gem

ICICI Prudential Indo Asia Equity Fund was launched in September 2007. The fund has an AUM of Rs 132 crores. Its one-year return is -12.04% as against the category average return of -9.84%. ICICI Prudential Indo Asia Equity Fund, an open-ended diversified equity fund offers a balanced portfolio of investment opportunities in India as well as Asia ex-Japan, where the offshore allocation is aimed at improving the return and risk characteristics of the portfolio over a longer term. This fund invests 65-100% in Indian equity and 0-35% in IOF Asian Equity Fund; a diversified fund managed by Prudential Asset Management, Singapore. The Indian component is managed as a flexi-cap fund and seeks to benefit from diversification across developed and emerging economies across Asia (ex-Japan). The fund has access to global leaders not otherwise available e.g. Industrial and Commercial Bank of China (China), Samsung Electronics (Korea), Taiwan Semi-Conductor (Taiwan), and access to industries not otherwise available e.g. Taiwan's semi-conductor industry, Hong Kong's property sector, China's insurance, and aerospace industries, Korea's ship building industry. The Fund is benchmarked against CNX Nifty (65) and MSCI AC Far East Free Ex-Japan (35). 97.27% of the assets of the portfolio are in equity. The expense ratio of the fund is 2.6% and the portfolio turnover ratio is 95%. The top three sectors are finance, energy, and services, constituting 57.87% of the assets. The fund managers are Shalya Shah since October 2014 and Atul Patel and Sankaran Naren since February 2015. 

FUND FLAVOUR

April 2015

Global/International Funds

For a global flavour…

If the persistent talk of policy paralysis, high inflation, rating downgrades, financial scams, and earnings slowdown is forcing you to defer putting money in Indian equities, it is time to consider investing abroad by buying units of global funds. These funds help you invest in equity but with less exposure to country-specific risks. Variously called global funds, overseas funds, and international funds, these are mainly fund of funds which invest in mutual funds with exposure to other countries. However, a few also invest directly in global equities.

While there are many ways to invest internationally, international mutual funds are a great way to gain exposure to international markets while simultaneously being diversified. It is also proven that investing in a mix of Indian and foreign stocks, has produced better returns, with less risk, than investing in the Indian market alone. It is no wonder then that there are so many different types of international mutual funds.

…on a platter

There are many different kinds of international mutual funds that you may choose to invest in to gain exposure to outside markets. You may choose to invest in one specific country; you may choose to invest in a mutual fund that specializes in multiple countries; you may purchase a mutual fund that specializes in sectors of the economy rather than purely demographic regions; or you may invest in multiple international mutual funds. The caveat is that each investment has very different risk and return profiles.

Global Funds

As the name suggests, these funds invest throughout the world, including the investor’s home country.

International Funds

These mutual funds are any funds outside an investor’s home country. For example, from an Indian’s perspective, it would be any funds not based in India.

Regional Funds

Regional funds are designed to focus on a specific geographic region. Rather than buy a mutual fund that invests all over the world, an investor could buy multiple regional funds.

Country Funds

These mutual funds focus on a single country, with the benefit being that the mutual fund would be specialized in that single country.

Global Sector Funds

Rather than focus on geography, global sector funds focus on a particular sector of the economy in various countries. This is great for gaining exposure to sectors rather than strictly countries.

The good, the bad, and the ugly…

Should you follow the herd overseas? The rewards could be substantial, but the same can also be said about the risks. Let us go over some of the things to keep in mind before going global with your portfolio.

The Good

The chief arguments in favor of mutual funds in general - instant diversification with a single investment, seasoned money management calling the shots, convenience, and reasonable liquidity - also apply to international stock funds.

Diversification
Diversification helps reduce the risk with any single investment. While there will always remain systematic or market risk with any investment, unsystematic, or specific risk, will decrease. It smooths out returns during periods of unpredictability.

Professional Management
Portfolio managers manage mutual funds. They rebalance the portfolio to match the investment objectives of the fund and decide what stocks to buy and sell for a modest fee. This is beneficial to those of you with little time or expertise to maintain your own portfolio.

Convenience
The mutual fund manages everything and you can sit back and enjoy a maintenance-free investment as long as they are invested.

Liquidity
International mutual funds can be bought or sold without worrying about a spread or how liquid the market is. They only take one day to settle when your net asset value is calculated at the end of the day.

Another major advantage is that you do not often have easy access to researching and buying overseas companies.

The Bad

Higher Expense Ratio

There is a price to pay for proven money management, and that comes in higher fees than typical mutual funds. Since most global funds in India invest in another fund, does that mean the investor has to pay twice? The answer is no. The fee that feeder/global funds charge is within the SEBI-allowed structures. This means the fund can charge up to the prescribed limit of 2.5%.

Currency Risk

Since many international funds do not actually hedge against currency risk, it is often a wild ride. Since global funds invest abroad, the investment is done in the currency of the country where the investment is made. There is a currency exposure that one takes while investing abroad. The returns may be impacted depending on how the rupee behaves vis-a-vis that currency. Thus, if at redemption, the rupee has depreciated against the dollar, you will earn more, and if the rupee has appreciated, your returns will be hit. This means any capital gain from these funds will be taxed at 10% without indexation and 20% with indexation. Short-term capital gains from debt funds are added to your income and taxed as per your tax slab.

Political Risk

Furthermore, there can be political risk, especially with emerging markets. The political stability of a country’s government can have a great impact on the value of the investment. Governments can change certain laws or there could be social unrest, which affects investments in those countries. Higher inflation can also decrease potential returns. Lastly, being overweight in one country, even outside of an investor’s domestic market, can be just as vulnerable as concentrating investments at home.

The Ugly

The pursuit for exotic returns also often comes with exotic risks. Investors learned that the hard way when the strong dollar ate into the returns of funds buying into overseas stock markets. The euro crisis and setbacks in Asia also stung results. The average large-cap international fund surrendered 4.8% of its value. That does not stack up very favorably to the S&P 500's better than 13% return.

There is also great volatility for international investors, particularly for those buying into country-specific funds.

So, there are some legitimate advantages to buying into international mutual funds. You get seasoned management that researches foreign equities for a living. That is valuable, but with few exceptions that exposure also carries greater risks. These funds may not suit a person who has a conservative approach to investment and is averse to investing in equity.

…and the impact on the fledgling global mutual fund market

Global funds are still evolving in India and have Rs 2,833 crore assets under management, or AUM, less than 1% of the mutual fund industry. In India, there are 41 global funds, which are commodity, country, and region-specific. Half of these schemes were launched during 2007-2010. Over the last three years, these have given an average annual return of 11%, with returns from individual funds varying from 0.5% to 20%. Global funds available in India have given mixed returns. Out of 41 funds which are diversified or theme-based, ING Global Real Estate and Fidelity International Opportunities Fund have been top performers with over 17% annual returns in the last three years. Both invest directly in shares of foreign countries. On the flip side, Birla Sun Life Global Precious Metals Fund has given a return of only 0.5%. The average return of international funds is -11.01% in the past year, among the worst across scheme categories. The value of Rs 100 invested a year ago stands today at Rs 88.99. Gold funds have returned -5.2%, while the Sensex is down 7% in the past year. The rupee is down nearly 10% against the dollar over the same period. Global funds also carry a higher expense ratio as most are feeders into their parent funds. Some of the worst performing international schemes are HSBC Mutual Fund’s Brazil Fund and Emerging Markets Fund, Birla Sun Life Mutual Fund’s Latin America Equity Fund and Global Commodities Fund, DSP BlackRock Mutual Fund's World Energy Fund and Mining Fund, and Mirae Asset Global Commodity Stocks Fund. Outcomes vary significantly across different international funds as they are not homogenous. In the last two years, the Indian market has outperformed its Asian peers resulting in funds focused on local equity outperforming their Asian equity counterparts. To fully appreciate the benefits of diversification, investors need to evaluate funds through longer cycles. The annualised return of international funds as a category from a three-year perspective was 1.07% and 1.74% over five years. Over the last three years, the annualised return of the Sensex was 13.05% while local equity schemes, across the board, provided annualised returns of between 14 and 32%. Only 13 schemes in the international category managed to provide positive returns to investors, though many did not make more than three per cent in the past year. Motilal Oswal Most Shares NASDAQ 100 ETF Fund, DSP BlackRock US Flexible Equity Fund, and Reliance Japan Equity Fund topped the charts with returns of 5.8-13.07%.

Are you investing enough abroad?

Your investments are like your vacations: you probably want to take some of them outside India. If you only invest in India, you ignore about half of the investment quality stocks in the world. It is like only looking at half the dinner menu. Investing abroad is also a smart move to diversify your investments. You do not want all your chips in one market. New investors should park about a third of their portfolio in foreign stocks, though the amount varies depending on your risk tolerance.

Here are a few keys to international investing:

1. Know your age, investing goals, and risk tolerance -- that will help you determine how much cash you are comfortable investing abroad. If you are in your 20s or 30s, investing abroad is a no brainer.

2. Invest with a long-term mindset: you should not buy today and sell tomorrow. Think decades.

3. Look for high growth areas. 

4. Focus on value. One key measure of value is the price-to-earnings (P/E) ratio.

No doubt, there are daunting headlines across the globe. Greece could default this year, China's stock market could be in a bubble, and Brazil is a mess. But if you are buying now and holding on for the long haul, foreign stocks are cheaper and generally have more room to grow than Indian stocks. One of the best ways to understand value and compare one market to the next is the P/E ratio. You can find companies with these characteristics with cheaper valuations – that is one reason why it is important to expand your horizons and invest internationally.