Investing in overseas funds aims to mitigate investment risks by diversifying across different geographies and economies. This is because different economies may be correlated negatively to each other. As such, an underperformance in one economy may be compensated by outperformance in another economy.

However, before one moves towards global economies for risk mitigation, they must take suitable diversification measures for the existing mutual fund schemes. Managing diversification with domestic mutual fund schemes is always helpful, as one generally understands the domestic economy much better than the global economies.

Several mutual fund schemes invest predominantly in domestic securities but can invest in foreign equities as per the investment mandate. Further, several specific mutual fund schemes only invest in foreign equities with insignificant investment in Indian equities. 

Before committing to a particular scheme, one must know the investment mandate for the scheme. Such information helps in assessing the suitability of the scheme to the risk-bearing capacity of the investor.

When it comes to global investing, there may be specific names which one may be more inclined to invest into. This may be due to the recent outperformance of such stocks, more familiarity with the Companies due to regular usage of products/ services, or more news coverage in Indian media. 

However, the fund needs to stay diversified with a basket of stocks instead of staying concentrated into popular names only. One can review the portfolio holdings and concentration of the top 10 holdings to know the concentration risk. 

One should be aware of the geographical exposure of the fund one is investing into, as it helps the investor assess the geographical and political risks associated with such investments. Further, one may not be inclined to take investment risks towards specific countries, which can be avoided if one knows the geographical reach of the investment mandate of the fund. 

Funds that invest globally are generally passive funds investing further in different global funds. As such, the expense ratio of such funds may be relatively higher than the regular mutual fund schemes, considering the cascading effect of the global fund's expense ratio. Since the expense ratios directly eat into investors' returns, one may also consider the fund's expense ratio to make an informed decision. 

If the fund is investing at least 65% of its net assets in the domestic securities listed in India, the fund is classified as an equity-oriented fund, and the gains are taxed at special tax rates. However, it is more likely that a global fund will be investing predominantly in foreign securities, due to which such funds cannot be classified as equity-oriented funds. 

The tax rates applicable for Short-Term Capital Gains (STCG) from such funds (with a holding period of less than 36 months) are taxed at the regular tax rates applicable to the investor, while the Long-Term Capital Gains (LTCG) are taxed at 20% with indexation benefit. This is in contrast to the tax rate of 15% for STCG and 10% for LTCG on equity-oriented funds. One may also factor in such tax impact while making an investment decision in such funds.