All you need to know about international funds and diversification SECTIONS Share Synopsis One needs to diversify equity mutual fund portfolios to reduce risks. At times, the Indian economy will go through rough patches and global markets will perform well and vice versa iStock Why is there a need to add international funds to portfolio? One needs to diversify equity mutual fund portfolios to reduce risks. At times, the Indian economy will go through rough patches and global markets will perform well and vice versa. Global markets have low correlation with Indian markets and hence help reduce risk. Also, many large companies in areas like automobile, technology, and the internet are based in markets like the US and Europe. Participation through international funds gives you a chance to own these companies.