While investing abroad, one factor that cannot be ignored is currency rates. The relative returns between US and India are heavily skewed by the rupee’s decline against the US dollar. One can never be certain of short-term forex movements but the basics of the two economies imply that the rupee will stay weakened over the long-term.
Of course, the case for investing in the US does not translate to a case for investing big sums immediately. The US markets are at an all-time high and it’s never good to dive in deep in such a situation. The best route would be to select a couple of broad-based funds and start an SIP that should get you a meaningful investment into US funds. Remember, unlike domestic Indian equity funds, long-term capital gains from international funds are not tax-free so do keep an eye on the tax situation when you have to redeem these funds. The taxation is identical to non-equity Indian funds.
However, the high markets and the taxability should not deter you from making a beginning. Here are a set of Indian funds that concentrate on mainstream US stocks. Make your pick and go!
Motilal Oswal MOst Shares NASDAQ-100 ETF
Strategy
This scheme will invest in the securities which are constituents of NASDAQ-100 Index in the same proportion as in the Index.
Why invest?
The NASDAQ-100 Index consists of the 100-largest US and global non-financial companies that are listed on the NASDAQ Stock Market. Effectively, this is a global index since about half of the revenue of these companies comes from outside the US. In the absence of the troubled financial sector, the index emphasises software, telecom, biotech, retail and other more resilient parts of the global economy. As an ETF, it can be traded continuously during market hours.
Risk
From a sectoral standpoint, the fund has limited diversification. If technology and related sectors suffer a specific downturn then the fund will not do well.
DSPBR US Flexible Equity
Strategy
The underlying fund invests at least 70 per cent of its total assets in equity securities of companies domiciled in, or exercising the predominant part of their economic activity, in the US.
Why invest?
A broadly diversified fund where the top-10 stocks take up only 30 per cent of assets, the portfolio is spread across a wide variety of sectors. The word ‘flexible’ in the name refers to the fact that the fund can invest in either growth or value stocks. The fund is likely to closely replicate the general direction and magnitude of the broad US markets.
Risk
Apart from the standard fund management risks, there is no special risk distinct from those that apply to the US markets in general.
FT India Feeder - Franklin US Opportunities Fund
Strategy
The underlying fund adopts investment approach of growth, quality and valuation in companies that are today's leaders and are emerging leaders of tomorrow.
Why invest?
Through its underlying fund, this feeder fund concentrates on quality stocks in high growth sectors such as software, technology, telecom, healthcare and others with similar characteristics. The fund is likely to track good growth in these industries without the drag of more traditional low growth sectors.
Risk
Risks are well-managed by a process of limiting sector exposure to 25 per cent and stock exposure to 5 per cent. Likely to be exposed only to the general market risk.
ICICI Prudential US Bluechip Equity
Strategy
This fund follows a stock selection strategy which is a combination top-down and bottom-up approach, without any sector preference to invest in select ‘Bluechip Companies’ listed on the US stock exchanges.
Why invest?
Predominantly large-cap approach across diverse sectors. ICICI-Pru sources inputs for stock selection from the US-based Morningstar Equity Research Services. No specific sectoral or style preference.
Risk
Unlikely to face any fund-specific risk apart from the general market risk of US stock markets.
Click here to read about Indian funds investing in US
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