Sumary of Should you invest in passive global mutual funds?:
- HDFC Mutual Fund is launching a Fund of Funds (FoF) tracking the MSCI World Index.
- Mint explains how global passive funds could work for Indian investors.
- A passive mutual fund seeks to replicate an index like the Nifty or the Sensex rather than beat it.
- A global passive FoF will track a global index such as the MSCI World Index, which invests in only developed countries, not emerging markets.
- This may open the door for FoFs tracking truly global indices such as the MSCI All Country World Index or the FTSE Global All Cap Index.
- Navi Mutual Fund has filed with the Securities and Exchange Board of India (Sebi) for a fund feeding into a Vanguard US stock market Exchange Traded Fund (ETF).
- Passive mutual funds have been around since 2011. However, they have focused on a single country and tilt toward a particular sector like technology.
- A global passive FoF eliminates such biases and allows your money to be spread across countries and sectors.