Mutual Funds in India to Invest in US Stocks

Investors can invest in US stocks via Indian mutual funds by purchasing units of domestic feeder funds or fund-of-funds electronically in their own name. Investments can be structured through lumpsum purchases, SIP, STP, or SWP modes using the Cambridge Wealth app, without needing an overseas brokerage account or utilizing the Liberalised Remittance Scheme (LRS) route.

Compare the underlying index, whether the fund invests directly or through a feeder structure, the expense ratio including underlying fund costs, and whether the RBI overseas investment limit currently restricts fresh purchases. Tax treatment also differs from domestic equity funds. Cambridge Wealth provides scheme information on these points.

Indian mutual funds primarily deploy three distinct investment structures. These are feeder funds that channel capital into overseas parent schemes, fund-of-funds that hold units of international ETFs, and India-domiciled schemes that invest directly in foreign listed securities. All units are registered electronically directly in the investor's name with the respective AMC and registrar.

International and US equity mutual funds receive non-equity tax treatment under Indian tax laws. Units held for more than 24 months qualify for a 12.5% long-term capital gains tax rate on transfers executed from 23 July 2024. Investments held for shorter durations are taxed at the investor's applicable income tax slab rate.

Yes, overseas investments by Indian mutual funds are governed by SEBI-mandated industry-wide caps on aggregate overseas asset allocation, alongside a dedicated sub-limit for overseas ETFs. Depending on whether AMCs have available headroom under these limits, schemes may periodically pause, restrict, or resume accepting fresh lumpsum or systematic investment inflows.

Eligible NRIs can invest in international and US equity funds through NRE or NRO accounts, benefiting from cross-border tax guidance and repatriation assistance. However, eligibility and documentation requirements vary by AMC, as specific FATCA restrictions and compliance rules may apply to investors categorized as US persons.