International funds have been among the worst performing funds in the past year. Average category returns have been only about one per cent, lower than all other categories except gold funds.

However, average category returns can deceive. Within the international category, investors have a few choices and they need to look at the country and theme to assess if a particular fund is suitable.

Funds focused on commodities, for instance, have fared abysmally, giving negative double- digit returns. Similarly, funds that invest in countries such as Russia and Brazil have suffered as commodity prices have tumbled globally. Both countries are exporters of oil and a fall in global crude oil prices has weighed on their economies.

Commodities- led markets would be a risky choice at present. Also, investing into themes such as energy and commodities will add a layer of cyclical risk to your portfolio, in addition to currency and geographical risks.

A few international funds, though, have done quite okay.

US feeder funds have gained between 10 and 13 per cent in one year. While the US economy is still not out of the woods, recent data suggest a positive trend. For instance, unemployment rate for February has fallen to the lowest in almost seven years. The strengthening dollar against other currencies, including the rupee, also augurs well for these funds.

However, diversification into different geographies, and not currency play, should be the chief reason for investing into these funds. Historically, Indian and US markets have had a low correlation, offering diversification to Indian investors. Currency play, if at all, should be used with a specific goal in mind, say experts. For example, if you plan to send your child to the US five years from now and expect the rupee to depreciate five per cent every year, adding US funds to your portfolio might be a good idea.

We have been advising clients to enter US funds for the past one- to- two years. Now, we are asking them to nibble into European funds. Bullish on Europe even though European funds have given negative returns in the past year. According to him, European economies is poised for a turnaround and the euros fall against the dollar has bottomed out.

The European Central Bank recently boosted its euro zone forecasts from three months ago, saying it expects a 1.5 per cent growth this year and 1.9 per cent in 2016.

China funds have also done well, with 9- 14 per cent one year returns. However, experts say that investors should stay away from China as the country seems to be slowing down, and those keen to take exposure to Asia or emerging markets would be better off investing in India. India is much better placed fundamentally in terms of delivering superior returns than China and other Asian markets. Also, Asian markets don't offer adequate diversification to Indian investors as they are driven by the same kind of triggers such as FII ( foreign institutional investor) inflows.

The BSE Sensex has given returns of about 30 per cent (year to date) in dollar terms, outperforming Japan ( 12.8 per cent), the US ( 10.5 per cent), Brazil (- 21.3 per cent) and Germany (- 0.7 per cent).

Setting aside five to 10 per cent of ones portfolio for feeder funds. However, in these times of global uncertainty, be cautious in selecting the right