We all have seen news of how some international stocks like Amazon, Facebook, and Tesla etc are doing wonderful. From last 2-3 yrs, more and more investors want to diversify beyond Indian equities and want to invest into other countries stocks. Today we will see how Indian investors can also invest in these international stocks in 3 ways
1 – Directly through a Broker website
This can either be an Indian brokerage house like ICICIDirect, Motilal Oswal which has tie-up with a foreign brokerage house again. Or it can also be some new age startups like Vested, IndMoney which has a direct tie-up with the global brokerage houses.
Here is a simple illustration given in this tweet on only Rs 6,166 gets invested when you put Rs 10,000, because a lot of money gets eaten up in the charges etc.
One of the ways to invest in global equities is through a brokerage house by opening a demat/trading account.
Once your account is opened, you can transfer the money in that account and do the buy and sell. However note that these are quite expensive in nature, simply because there are transfer fees which can make them quite expensive especially if your ticket size if quite small.
I feel this is a cumbersome method of investing out of India, simply due to paperwork and hassles involved. This simply means that this route is only for someone whose transactions is of large size, and someone who wants the fun of selecting the stocks themselves and reviews them .
By Countries / Region
DSP US Flexible Equity
Edelweiss US Value Equity Offshore Fund . Edelweiss Greater China Equity Off-shore Fund Edelweiss Europe Dynamic Equity Offshore Fund. Edelweiss Asean Equity Off Shore Fund HSBC Brazil Fund Gr Dir
2 – Investing through a mutual fund
Another great advantage is that you get tons of variety and options you get through a mutual fund. If you want to invest directly in stocks through a broker, mostly you will see the option for investing US based companies only.
Another way to invest in international stocks is through a mutual fund. The best part of this is that for a retail investor, there is no change in process and no extra paper work. You can simple buy the units of mutual funds or do the SIP in the same manner.
However with mutual funds, you can get options based on countries, emerging markets, sector or geographies.. Here are some examples.
Global or Emerging Markets Funds (which invested in various countries)
Kotak Global Emerging Mkt
ABSL Global Emerging Opp
PGIM India Global Equity Opp Kotak NASDAQ 100 FOF
Motilal Oswal S&P 500 Index Fund Sundaram Global Brand Fund
Edelweiss Emerging Mkts Opp Equity Offshore Fund
Mirae Asset NYSE FANG + ETF FOF
Know this, before you invest in international mutual funds
Also, on taxation front one big disadvantage of these international mutual funds is that they are taxed like a debt fund. Yes- so any profits you earn before 3 yrs, they will be treated as a short term capital gain and taxed at your income slab rates. Note that it’s also quite fancy to think that you are investing in international portfolio, so many people go over board and put a very high amount in these funds. Look at these funds mainly as a way to diversify your portfolio and reduce the dependence on Indian equities only. There is no compulsion that you have to invest out of India.
Final point is that these are all mostly funds of funds at the end of the day, which means that they are just a mutual fund which is buying the mutual fund units of another foreign mutual fund (that’s totally ok). So their expense ratio may be a little on higher side!. But if the are saying you from all hassles, paperwork and guesswork, I think its worth paying the fees and participate in the fund.
Funds based on a theme/sector
Edelweiss US Technology Equity FOF
Axis Global Innovation FOF
Invesco India Invesco Global Consumer Trends FOF
DSP World Gold Fund
Kotak Intl REIT FOF
DSP World Energy
Finally there are funds which are focused on a specific sector or theme and feel that it’s too promising. It can be technology, Real estate or consumption etc.
This simply means that this route is only for someone whose transactions is of large size, and someone who wants the fun of selecting the stocks themselves and reviews them on their own. I feel this is a cumbersome method of investing out of India, simply due to paperwork and hassles involved.
If you have any question on investing in global equities then send me your problem in comment box