Stock mutual funds in foreign currency

You would often hear the proverb 'high risk high return' in the investment world. Among the types of mutual funds, stock mutual fund is an investment tool that refers to that proverb. Potential costs and benefits derived from the rising and falling of stock prices. If the stock price tends to increase, the net asset value (NAV) goes up, vice versa.

For long-term

Mutual fund investment is the best used as a long term investment. With a longer time to manage investments, normally the investment manager can provide a positive return to the maximum.

For the stock mutual fund denominated in foreign currency, there are two potential advantages: the increase price of underlying asset and the strengthening of the exchange rate. Therefore, this type mutual fund can also be a means of foreign exchange hedging against exchange rate fluctuations.

Conversely, the risk is also double, i.e. when the underlying asset price falls and the exchange rate weakened. Clearly, foreign currency mutual funds can be used to meet foreign exchange needs in the future.

However, investors should not be hasty to choose the mutual fund products. The exchange rates are always changing. Investment manager's profile is more important as a consideration in choosing a product. From this it can be seen the performance of historical returns (products) that they manage.

Investment allocation that managed by the investment manager must also be the concern of investors. Check whether the Investment Manager invest in liquid stocks or not. Sometimes the investment manager also allocates investment in overseas stock markets.

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