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Allocating some Funds into international Equities can provide a hedge against Rupee depreciation

International equities on mutual funds, it will be great for investors to invest and make a lot of gain in a foreign country though there may be a lot of problem related to such investment whenever there is a need for there to be an exchange in the value of the gain into the value of the local currency.

Investment in Stocks in international EQuities

For all investors and citizens if a country who is involved in transaction and investment in stocks and bonds within and outside the framework of a country, there are so many things that will affect their gain from such investment. In the business world, there is a term referred to as the diversification of portfolio which helps to reduce the risk that investors are exposed to when they diversify their portfolio of investment.

READ: Equity mutual funds investments – Indians invest 1.5 Lakh crore per annum

It is advisable that whenever you want to diversify your investment one thing you should always put in mind is that different types of investment have different risks that are attached to them and whenever you want to invest you should combine two or more type of investments with different characteristics and risk exposure so that whenever there is a fall in the value of one investment, the other will be able to cover up for such loss. If an investor want to invest in an investment with little or no risk, there will be a small gain in such investment as compared to the remaining form of investments.

Foreign stocks investment to hedge against rupee depreciation

For the sake of history, during the year 2008 and 2009, one thing that actually happened is that there was a fall in the value of stock at a rate of about 39% and it really caused so many people around really great loss upon investment. Proceeding this event, during the year after, the stick had an increase in the value of the stock at a rate which was pretty above 90% thereby allowing for a lot of gain for anybody who actually invested in such a stock during that year.

Foreign stocks investment to hedge against rupee depreciation

Therefore, the amount of gain derived from an investment is affected by so many factors that might not be known to the investor. As regards the international equities on mutual funds, it will be great for investors to invest and make a lot of gain in a foreign country though there may be a lot of problem related to such investment whenever there is a need for there to be an exchange in the value of the gain into the value of the local currency. Therefore, it is important that the investors should invest in an equity which is certain to make a completely high gain upon completion.

READ: Why only 2% Indians invest in Stock market

Since there could be a really great change in the impact of goods and services in portfolios based on the foreign exchange rates. As a person or an individual, you should make sure you properly hedge the risk and invest whenever it seems appropriate and right for you as a person to be able to meet all the requirements and need and to be able to grow the value of the rupee in comparison with the United States dollar. For there to be such an improvement, investors will be ready to invest greatly in the foreign reserves and make gains so as to be able to increase the exchange rate if the currency.

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Harish Yadav

Finance and market analyst and chief writer on howtofinance. Passionate to read books and articles on marketing and accounting. Also edits other articles and publish them here.

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