There are several distinct ways an Indian can actually invest abroad, and they differ far more than they first appear. This module walks through each route, US ETFs, UCITS ETFs, GIFT City funds, and international mutual funds and then compares them across the dimensions that matter, so you can find the one that genuinely fits who you are.
You buy units in rupees, the fund house does the overseas investing on your behalf, and you hold a single familiar unit at home. That is the whole appeal: the complexity of going global is absorbed by the fund, not by you.
Underneath, these funds are built in one of two ways, and the difference matters enough to understand.
Some invest directly in foreign stocks. The fund house itself goes out and buys the overseas companies, holding the actual shares in the fund's portfolio.
Others are built as Funds of Funds, which you also met in Module 0. Instead of buying foreign stocks directly, the Indian fund buys units of an existing overseas fund that already holds those companies.
Alongside international mutual funds, Indian fund houses also offer international index funds and Indian-listed ETFs that track foreign markets, for example a fund tracking the Nasdaq 100, bought in rupees on an Indian platform or traded on the NSE or BSE like any domestic ETF.
These need no foreign brokerage account and, in the case of the index-fund versions, can often be reached through an ordinary domestic investing setup. For a passive investor who wants cheap, broad foreign-index exposure without leaving the Indian system at all, this is one of the best possible options to global investing.
Indian domestic funds that invest abroad share a single, industry-wide ceiling on how much they can collectively hold in foreign securities. This is a regulatory cap on the entire domestic mutual fund industry's overseas holdings.
As that ceiling fills up, fund houses are forced to pause fresh investments into their international funds, sometimes for long stretches. So you may find that the exact international fund you want to buy is temporarily closed to new money. We explored this in the previous chapter.
One question. Less than 10 seconds.
Reinforce what you've learned before continuing to the next chapter.
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