Invest Abroad Using Indian Mutual Funds

Written by Vidya Kumar

November 29, 2017

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Executive Summary: You can invest in markets abroad through Mutual Fund schemes in India that invest abroad. Investing in markets abroad gives your portfolio diversification and reduced risk. At the same time, there are risks of currency fluctuations and social and economic changes that affect investments in international markets. 

There are many blue chip stocks listed in stock exchanges abroad which you feel should be part of your investment portfolio. But investing in stocks abroad means having a different trading account, higher commissions, transfer of funds and tax payable. There is lot of documentation involved. Moreover it also means you need to keep a close watch on global economic events and other factors affecting stock markets worldwide. Liquidity and currency fluctuations are also risks that you have to face. But investing in global markets brings diversification in the portfolio and the potential to earn. So the alternative is to invest in Indian Mutual funds that focus on markets abroad. They can be country specific or region specific. They can also be thematic or universal in exposure. Here are a few funds (for example purpose ONLY) that focus on markets abroad –
Name
Objective
1 Year Return
3 Year Return
5 Year Return
ICICI Prudential Global Stable Equity Fund
An open-ended fund of funds scheme. To provide returns by investing in units of one or more mutual fund schemes abroad.
6.90%
6.90%
Motilal Oswal MOst Shares NASDAQ – 100 ETF
Match the performance of the NASDAQ 100 Index.
22.90%
15.10%
22.50%
Franklin Asian Equity Fund
To take advantage of long-term growth of companies in the Asian region (excluding Japan).
32.60%

11.70%
12.00%
Edelweiss Greater China Equity Fund
To provide long term capital appreciation by investing in JP Morgan Funds – Greater China Fund. It has investments in other liquid instruments.
38.70%
13.70%
15.20%

There are more than 40 Mutual Fund schemes as of today that invest in markets abroad.

Tax Treatment
Short term capital gains arising due to selling of units of MF Scheme before 1 year will be added to investor’s income and taxed as per tax slab of the individual.
Long Term Capital gains are charged at 10% tax on capital gains without Indexation and 20% tax on capital gains with Indexation.

Should I Invest in International MFs?
You can invest a part of your money in international funds as they provide diversification and risk diversification. At the same time you can be hedged against Indian market downturns. It also helps in funding expenses like children’s education abroad in the future. At the same time, beware of currency risks and exposure to market risk due to social or economic factors in that particular country invested in.
You can allocate a small portion of your wealth to these funds if you have already finished investing in instruments based on local stock market.

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