In recent times, the Indian stock markets have grown considerably by allowing investors to invest in a multitude of investment channels across the globe. For example, today, investors have the option to invest in stocks of other countries like the USA, UK, and others. yes there is a process to invest in US stocks. Thanks to the rapid penetration of advanced technology and increasing knowledge base of investors who are exposing themselves to global stock markets.
If you want to buy the stocks of Apple of MG from India, it is totally possible in the present context. This means you can expect to get whopping returns on your investment by investing in global stocks. And doing this is quite certain due to the rapid growth of foreign stock indices. For example, in the past 10 years, S&P 500 witnessed an increase of over 200% whereas the S&P BSE Sensex almost got doubled.
Though there are several third-party routes available to make your investment work in global stocks. one powerful way to do this is to invest in mutual funds. Among all the available channels at present, this is certainly the aptest and effective way to invest in global stocks.
Let’s get to know how you can invest in US stocks via mutual funds.
Options to invest in US stocks for Investors in India
At present, there is only a single option available to invest in US stocks via Indian mutual funds. The investors who are willing to make such investments can invest in US stocks by choosing US-centred global mutual funds. These are primarily overseas FoFs (fund of funds) or other global mutual funds.
An international mutual fund refers to a scheme that principally makes investments in equity or equity-related devices of objects registered in the markets of a country other than India. This scheme invests in debt securities.
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Things to keep in mind while focusing on US-Focused International MFs
Probable stock investors should remain aware of the point that US-based international mutual funds give the advantage of diversification.
Mutual funds that primarily deal in the US stocks markets confronted the optimum flows in the first six months of FY2021 as per the best broker for trading.
The below mentioned is an example of some of the US-based mutual funds and highpoints their performance based on losing returns.
Mutual Fund Returns (approx) Asset Management
ICICI Prudential US Bluechip Equity Fund 18.50% ICICI Prudential Mutual Fund
Motilal Oswal NASDAQ 100 ETF 20.19% Motilal Oswal Mutual Fund
Nippon India US Equity Opportunities Fund 18.92% Nippon India Mutual Fund
Reasons To Invest in International Mutual Funds
If you are looking to make an entry into the global investing arena. particularly in US markets, you can choose to invest in these mutual funds.
- Permitting topographical broadening to reduce the risk of general equity portfolio
- The conception of hedge against the devaluation of the currency
- Complementing domestic exposure to equity with overseas economies
As per various global stock experts and top stock brokers in India, there are several American firms like Amazon, Netflix, Microsoft, Facebook, Apple, are found to be well established to counter any disturbances in the global economy.
However, no investment is thought to be completely risk-free. Any kind of technical and political slowdown in the US can impact investments. Usually, global mutual funds are well-matched for investors with a long-term investment prospect and advanced risk appetite.
In addition, they should feel easy with the related risks of investing in various MFs.
Let’s checkout: Knowledge is power
Risks Associated With Investing in International Mutual Funds
Investing in international mutual funds also have several risks:
- International stock market risk: International MFs render their investors’ investment to the political, economic, and other types of market risks associated with global economies. These risks may be on the upper side in the case of a few growing markets due to elements.
- Exchange rate risk: Foreign exchange rates are related to variations. Thus, in the case of such fluctuations, there comes an opposite effect on returns.
- Concentration risk: An international MF with a focused investment collection may influence the returns if any sector faces downturns. It creates higher risk as well as upper return variations.
Tax Implications of International Mutual Funds
International mutual funds incur taxes similar to any other mutual funds in India:
Long-standing capital gains or LTCGs on the recovery of units after 3 years of investment. This stands at the rate of 20% with indexation advantages.
Short-term capital improvements or STCGs on MF units converted before the period of 3 years of investment. That has applicable taxes on the basis of an investor’s tax block.