Why are Indian investors unable to buy international mutual funds?

2022 has been a disastrous year for US tech stocks. The Nasdaq 100, the index comprised primarily of technology and communications stocks, is down nearly 28% year-to-date in 2022. As an Indian investor looking to diversify into foreign stocks, some of the most popular stocks are Apple, Amazon, Tesla, Microsoft, Meta, and Google among others. However, apart from the options available to gain exposure to US equities through an international trading platform, the window for buying international mutual funds in India is almost closed.

There are several mutual fund companies in India that offer international mutual funds to Indian investors. The total amount of offshore investments in the mutual fund industry is limited to a maximum of US$7 billion, in accordance with SEBI regulations. The maximum amount of overseas investment a mutual fund company can have is US$1 billion.

International Mutual Funds

ABSL Global Emrgng Opp

ABSL Intl Eqt A

ABSL NASDAQ 100 FOF

Global Axis Eqt Alpha FoF

Axis Grtr China Eqt FoF

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NASDAQ Axis 100 FoF

Global DSP Allocation

DSP US Flexible Eqt

Edelweiss ASEAN Eqt Offshore

Edelweiss Emrgng Mkt Opp Eqt Offshr

Edelweiss Grtr China Eqt Offshore

Edelweiss US Tech Eqt FoF

Franklin Asian Eqt Dir

Franklin Ind Feeder Franklin US Opp

Franklin Ind Feeder Templeton European Opp

However, to buy international stocks in dollars, the combined limit of $7 billion was about to be exceeded by them. SEBI subsequently imposed a restriction on fund companies offering foreign funds from 02 February 2022.

The aggregate upper limit of US$7 billion for the entire industry includes a separate upper threshold of US$1 billion for mutual funds investing in (foreign-listed) ETFs and they are still open to investors. However, the pricing of these ETFs can be an issue with the restrictions in place.

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International Mutual Funds

HDFC FoF Developed World Indices

HSBC Asia Pacific (ExJapan) Div Yld

HSBC Brazil

HSBC Global Emerging Markets

HSBC Global Eqt Climate Change FoF

ICICI Pru Global Advtg (FOF)

ICICI Pru Global Stable Eqt (FOF)

ICICI Pru NASDAQ 100 Index

ICICI Pru Strategic Metal and Energy Eqt FoF

IDFC US Eqt FoF

Invesco (I) Global Eqt Incm FoF

Invesco Ind-Invsco EQQQ NSDQ-100 ETF FoF

In addition, from June 17, 2022, SEBI had allowed AMCs to resume underwriting and investing in foreign funds/securities up to available margin without breaching the overseas investment limit as of February 1, 2022. .

International Mutual Funds

Kotak Global Emrgng Mkt

Kotak Global Innovation FoF

Kotak Nasdaq 100 FOF Dir

Mirae Asset Global Electric & Autonomous Vehicles ETF FoF

Mirae Asset Global X Artificial Intelligence & Tech ETF FoF

Mirae Asset Hang Seng TECH ETF

Mirae Asset Hang Seng TECH ETF FoF

Mirae Asset NYSE FANG+ ETF

Mirae Asset NYSE FANG+ ETF FoF

Mirae Asset S&P 500 Top 50 ETFs

Mirae Asset S&P 500 Top 50 FoF ETFs

Overseas investment limit review may be the need of the hour. The US stock market offers many opportunities for investors to diversify and manage country risk. Currently, two things are not going in favor of US equities, particularly in the technology sector – first, the high valuation they enjoyed in the low interest rate regime is no longer there as rates rise, and second, the changing economic environment puts pressure on their core businesses.

International Mutual Funds

Motilal Oswal MSCI Top100 Select Index

Motilal Oswal NASDAQ 100 ETF

Motilal Oswal Nasdaq 100 FOF

Motilal Oswal Nasdaq Q 50 ETF

Motilal Oswal S&P 500 Index Fund

Navi NASDAQ 100 FoF

Navi US Total Stock Mkt FoF

International Mutual Funds

However, a rebound of these leading companies in their commercial activities cannot be ruled out. For a long-term investor, making allocations when valuations have fallen is an opportune time.

Nippon Ind ETF Hang Seng BeES

Nippon Ind Japan Eqt

Nippon Ind Taiwan Eqt

Nippon Ind US Eqt Opp

PGIM Ind Emrgng Mkts Eqt

PGIM Ind Global Eqt Opp

SBI Intl Access-US Eqt FoF

Sundaram Global Brand

From mutual funds to funds of funds to ETFs, the global equity market offers various opportunities for building an international portfolio that can provide the investor with domestic portfolio diversification.