All nine schemes in this investment domain have outperformed the Sensex over the past one month. While the Sensex fell by 8.9 per cent, four schemes have generated positive returns of between 1.3 and 4.4 per cent (See table: Global Outperformance). No scheme investing exclusively in the Indian market has shown a positive return, though 64 or a third have outperformed the Sensex during the month.

The best performers: DWS Global Thematic Offshore Fund (4.4 per cent), Birla Sun Life Int. Equity Plan A (3 per cent), Principal Global Opportunities (2 per cent) and Sundaram BNP Paribas Global Advantage (1.3 per cent). The worst performer among these nine, Birla Sun Life Int. Equity Plan B (-7.7 per cent), has bettered the Sensex by 1.2 percentage points.

“The Indian market has fallen a lot because valuation wise it was on a slight premium as compared to other emerging markets,” said Rajat Jain, chief investment officer, Principal Mutual Fund. Compare India’s performance with the world’s and the high-valuation, high-fall theory holds good: with a fall of 8.9 per cent, the highest among 10 largest markets, the Indian market still has the second-highest PE multiple of 20.8, just behind China’s 21.1.

“While the current market fall opens good investment opportunity to invest in India, the better performance of overseas funds proves that they are a good investment tool as far as diversification of asset allocation and hedging is concerned,” said Surya Bhatia, a Delhi based financial planner. “Ideally an investor can have 10-15 per cent of his equity asset allocation in schemes investing overseas.”

One month is too short a period to gauge the performance of equity funds, but in times as volatile and as short term as these, they do present a compelling case for global diversification.