Key advantages and risks of investing in international funds (2024)

International funds are one of the tools of investing for investors who are looking to diversify their portfolios beyond domestic markets. While these funds offer various global opportunities and have potential for higher returns, they also come with a set of risks.

Tarun Birani, Founder & CEO of TBNG Capital Advisors, mentioned the significance of international investing, stating, "International investing is one of the very important parts of investing."

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One of the main advantages of international funds is diversification, because of which investors gain exposure to a broader range of industries, sectors, and geographical regions.

Furthermore, international funds provide access to global market leaders. Additionally, fluctuations in currency values can also benefit investors as it can enhance returns.

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However, investors also must remain cautious of the risks associated with international funds.

The currency risk - being one of the advantage - can also become a disadvantage as fluctuations in exchange rates can impact the value of investments denominated in foreign currencies.

Political and economic instability in foreign markets is another risk to investors. Regulatory risks, higher costs and information asymmetry can pose a notable challenge in international markets.

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While international funds offer opportunities for diversification and potential growth, investors must tread cautiously, considering the risks in global markets.

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