With Donald Trump winning the US Presidential Elections 2024, investing in the US stocks has suddenly become sought after. The S&P 500 briefly surpassed the 6,000-mark and closed with its biggest weekly percentage gain in a year, reported Reuters.
This has prompted several Indian investors to start exploring options to invest in the US markets. There are several mutual funds in India which invest in either foreign securities or overseas mutual funds.
It is noteworthy that the Sebi recently released a circular permitting Indian mutual funds to invest in overseas funds or unit trusts, which have an exposure to Indian stocks as long as the exposure is limited to 25 percent of total asset size. Through this regulation, Sebi aims to ease investments in overseas mutual funds and bring transparency to investments.
If the exposure goes beyond 25 per cent, an observance period of six months from the date of publicly available information of such a breach will be allowed for the Indian mutual fund scheme to rebalance the assets.
4. DSP US Flexible Equity Fund of Fund
5. Edelweiss US Technology Equity FoF
6. Edelweiss US Value Equity Offshore Fund
7. Franklin India Feeder Franklin US Opportunities Fund
8. Invesco India – Invesco EQQQ NASDAQ-100 ETF FoF
10. Mirae Asset NYSE FANG+ ETF FoF
11. Mirae Asset S&P 500 Top 50 ETF FoF
12. Motilal Oswal Nasdaq 100 FOF
Can you invest in US stocks or mutual funds?
Mutual funds which invest in the foreign securities stopped accepting fresh deposits in April 2022, and fund of funds (FOFs) which invest in ETFs listed in foreign stock markets stopped taking fresh investments from April 2024.
This happened because mutual funds in India are restricted to invest only up to $7 billion cumulatively into the foreign stocks, and up to $1 billion collectively into exchange traded funds (ETFs) listed abroad.
Therefore, most fund houses have stopped accepting fresh deposits into these US-centric schemes.
“Because of the SEBI restriction of not allowing Indian mutual funds to invest more than $7 billion in overseas securities (a limit that was hit in April 2022), most mutual fund houses are not accepting any fresh deposits. However, whenever you get a chance in the near future, you can invest in the US markets. One can invest in the NASDAQ which gives exposure only to IT stocks or to the entire US market by investing in fund of funds. To my mind, investing in a fund of funds is any day better than investing in an ETF,” says Sridharan S, a Sebi-registered investment advisor and Founder of Wealth Ladder Direct.