Question

why invest international equity funds can reduce transaction cost and get exchange rate benefit?

100 words

Answer 1

Benefit of exchange rate:

International currency exchange rates keep changing. Sometimes the currency of the investor's home country may be strong, and sometimes it may be weak. There are times when a stronger currency in the foreign country where an investor has a portfolio may benefit the investor.

Transaction costs:

This is generally the cost of buying a selling a good or service. But in financial perspectives it includes brokerage commissions & spreads. At times transaction costs can diminish the returns but this is not possible in international equities as the investors deal directly with buying & selling of securities & don’t involve any brokerage as a result of which maximum returns are guaranteed.