Mutual funds that are focused on MNCs (Multi-National Corporations) have generated excellent returns in the last decade. If you are new to mutual funds or have been investing for some time now, we’ll provide you with five reasons that make these MNC Mutual Funds a must for every portfolio.
Mutual funds are of many different types. There are equity funds, debt funds, ELSS, balanced funds and a lot more to suit the investment style of the investors. Among all the different types of mutual funds, one type of fund that has consistently performed throughout the years is the MNC funds.
These are thematic equity funds which majorly invest in stocks of MNCs. If you are aiming to create a balanced portfolio, we will provide you with five reasons that make these MNC funds a must for every portfolio.
- Growth Potential
An MNC Mutual Fund invests your money in reputed multinational companies. As these companies are backed by foreign investments, they offer an excellent growth potential and have proved their worth time and again in the last decade. The companies are generally low on debt, have excellent balance sheets and corporate governance issues are hardly an issue for these companies, making then an ideal choice for investors with a long-term goal.
- Rich Dividends
MNCs also offer excellent dividends as they are required to send a major part of their profits back to their parent organization without any significant tax or legal implication. For an investor, this means that rather than reinvesting in the growth of the company, the profits are distributed among the investors.
- Less Risky
Another major benefit f investing in MNC funds is the fact that these funds do not invest your money in a particular sector. As a result, they are less risky as compared to other thematic funds which focus on a single sector. However, it is often recommended that investors should invest in these funds with a horizon of at least 3 to 5 years. Also, if past performance of such funds is taken into consideration, these funds are known to perform in bull as well as bear markets.
- Minimum Investment Required
One can start investing in these funds with as little as Rs. 5,000. These funds do not have any entry load and are open-ended funds. This means that you can buy or sell your funds at any time. However, if you redeem the funds with 1 year from the investment data, you’ll be required to pay an exit load of 1% of the investment amount.
- SIP Facility Available
Moreover, these funds also allow you to invest in them through a SIP (Systematic Investment Plan). You can start a SIP of Rs. 1,000 each month and the amount will be automatically deducted from your bank account to purchase the units of the selected fund as per their current NAV. The SIP facility makes the whole investment process simpler and instills discipline in the investor.
These are five reasons that make MNC funds an ideal choice for every investor. But before selecting a fund, make sure that you check the reputation of the fund house and past performance of the fund.