How to Invest in Global Mutual Funds from India? A Complete Guide
With increasing globalization, investing in international mutual funds allows Indian investors to diversify their portfolio beyond domestic markets. These funds provide exposure to foreign markets such as the U.S., Europe, China, Japan, and emerging economies, enabling investors to benefit from global growth trends.
This guide explains how to invest in global mutual funds from India, their benefits, risks, taxation, and the best available options.
What Are Global Mutual Funds?
Global mutual funds invest in equities, bonds, or other securities of companies listed outside India. These funds either:
- Directly invest in international stocks like Apple, Tesla, and Microsoft.
- Invest in an existing foreign mutual fund (called Feeder Funds).
🔹 Example: If you invest in the Motilal Oswal Nasdaq 100 Fund, your money is indirectly invested in top U.S. tech giants through a Feeder Fund.
Benefits of Investing in Global Mutual Funds
✅ Global Diversification – Reduces risk by spreading investments across different economies.
✅ Exposure to Global Leaders – Invest in top international companies like Apple, Google, and Amazon.
✅ Hedge Against Rupee Depreciation – A falling INR can increase the value of global investments.
✅ Higher Growth Potential – Some international markets (e.g., the U.S.) have delivered better long-term returns than India.
✅ Thematic and Sectoral Investments – Gain access to unique themes like U.S. technology, global healthcare, or energy.
How to Invest in Global Mutual Funds from India?
There are two ways Indian investors can invest in international mutual funds:
1️⃣ Invest in Indian Mutual Funds with Global Exposure
Indian mutual fund houses offer international mutual funds that invest in global markets. You can invest in these funds just like regular mutual funds using:
📌 Steps to Invest:
- Open a mutual fund account with Groww, Zerodha Coin, Paytm Money, ICICI Direct, HDFC Securities, or your preferred platform.
- Search for global mutual funds on the platform.
- Choose a fund and select your investment mode:
- Lump sum investment (one-time)
- SIP (Systematic Investment Plan) for regular investments
- Complete KYC verification (if not already done).
- Invest and track your portfolio regularly.
✅ Best for: Investors who prefer simple and tax-efficient investments in global markets.
2️⃣ Invest in Foreign Mutual Funds via LRS (Liberalized Remittance Scheme)
Indians can invest directly in foreign mutual funds using LRS (Liberalized Remittance Scheme), which allows up to $250,000 per year for foreign investments.
📌 Steps to Invest in Foreign Mutual Funds:
- Open a foreign investment account with platforms like Vested, INDmoney, or Stockal.
- Transfer funds in USD via a bank remittance under LRS.
- Choose a U.S./global mutual fund (like Vanguard, Fidelity, or BlackRock funds).
- Invest and track your portfolio.
🚨 Important: Direct investments in foreign mutual funds involve higher costs, currency risks, and complex taxation.
✅ Best for: High-net-worth individuals (HNIs) looking for direct international exposure.
Best International Mutual Funds for Indian Investors
A. Top Indian Mutual Funds Investing in Global Markets
| Fund Name | Investment Focus | Expense Ratio | 3-Year Return |
|---|---|---|---|
| Motilal Oswal Nasdaq 100 FoF | U.S. Tech Stocks (Nasdaq-100) | ~0.56% | ~24.5% |
| Edelweiss US Technology Fund | U.S. Technology Sector | ~0.95% | ~21.8% |
| Franklin India Feeder - Franklin US Opportunities Fund | U.S. Growth Stocks | ~1.12% | ~20.2% |
| Mirae Asset NYSE FANG+ FoF | U.S. Tech Giants (Facebook, Apple, Google, etc.) | ~0.33% | ~22.7% |
| Nippon India ETF Hang Seng BeES | Hong Kong’s Hang Seng Index | ~0.80% | ~15.2% |
📌 Key Takeaways:
- Best for U.S. Tech Exposure: Motilal Oswal Nasdaq 100 FoF & Edelweiss US Tech Fund.
- Best for Broad U.S. Growth Stocks: Franklin US Opportunities Fund.
- Best for China/Hong Kong Exposure: Nippon India ETF Hang Seng BeES.
B. Top Foreign Mutual Funds (Available via LRS)
| Fund Name | Investment Focus | Expense Ratio | 5-Year Return |
|---|---|---|---|
| Vanguard S&P 500 ETF (VOO) | S&P 500 (Top U.S. 500 companies) | 0.03% | ~15.6% |
| Fidelity Contrafund | U.S. Growth Stocks | 0.86% | ~17.2% |
| BlackRock World Technology Fund | Global Technology Sector | 1.07% | ~20.4% |
| iShares MSCI Emerging Markets ETF (EEM) | Emerging Markets | 0.68% | ~12.8% |
| Schwab International Equity ETF (SCHF) | Developed Market Stocks (excluding the U.S.) | 0.06% | ~9.5% |
📌 Key Takeaways:
- Best for Broad U.S. Market Exposure: Vanguard S&P 500 ETF.
- Best for High-Growth U.S. Stocks: Fidelity Contrafund.
- Best for Global Tech: BlackRock World Technology Fund.
- Best for Emerging Markets: iShares MSCI Emerging Markets ETF.
Taxation on Global Mutual Funds for Indian Investors
A. Tax on Indian Global Mutual Funds
- Short-Term Capital Gains (STCG): If sold within 3 years, taxed as per income tax slab.
- Long-Term Capital Gains (LTCG): If held beyond 3 years, taxed at 20% with indexation benefits.
B. Tax on Foreign Mutual Funds (Direct Investments via LRS)
- Dividend Tax: 25-30% withholding tax in the U.S. (Can be claimed under DTAA).
- Capital Gains Tax: Taxed as per Indian tax slabs (No indexation benefits).
📌 Tax Planning Tip:
Investing through Indian global mutual funds is more tax-efficient than direct foreign funds, as they avoid U.S. dividend tax.
Final Thoughts: Should You Invest in Global Mutual Funds?
✅ You SHOULD Invest in Global Mutual Funds if:
✔️ You want to diversify beyond India and reduce risks.
✔️ You seek exposure to top international companies.
✔️ You want to hedge against INR depreciation.
✔️ You have a long-term investment horizon (3-5 years).
❌ You SHOULD AVOID Global Mutual Funds if:
❌ You are not comfortable with foreign exchange risks.
❌ You prefer only Indian markets.
❌ You have a short-term investment horizon.
FAQs on Investing in Global Mutual Funds
1. Can I invest in international mutual funds from India?
Yes, through Indian AMCs or directly via foreign brokers under LRS.
2. Is it better to invest in international stocks or global mutual funds?
Global mutual funds are easier and tax-efficient, while international stocks provide direct ownership but require a foreign trading account.
3. Which global mutual fund is best for long-term investment?
- For U.S. Tech Exposure: Motilal Oswal Nasdaq 100 FoF.
- For Broad U.S. Market: Vanguard S&P 500 ETF.
- For Global Diversification: BlackRock World Technology Fund.
📢 Final Verdict: Investing in Global Mutual Funds is an excellent way to diversify, access global markets, and hedge against Indian risks. 🚀 If you're ready to expand your portfolio beyond India, start with a U.S.-focused fund like Nasdaq 100 or S&P 500.
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