International mutual funds have witnessed a sustained investors' exodus for four consecutive months, despite foreign markets, particularly the US, beating their Indian counterparts by a significant margin since the turn of 2023. Strange as it may seem, let's understand why international funds are battling against the odds and what you should do. Under siege International mutual funds are struggling against not just one, but multiple tides of adversity. First, RBI's permissible overseas remittance . Second, snatching away the indexation benefit since this year's budget, making direct international investing more tax efficient. As a result, investors have yanked out their international fund investments with great intensity. For the first time in five years, the net flows are in the negative for several months. Due to a lack of appeal, even fund houses have held their horses from launching any new international fund, with the last such fund being launched over nine months back. Mukul Ojha Overblown reaction? While investors can't do much about the foreign investment ceiling, the reaction to indexation fallout has been overblown. While the lack of indexation benefit increases the tax liability of international mutual fund investors, other foreign investing options also have their fair share of disadvantages. Taking the case of the Liberalised Remittance Scheme (LRS) - while this route allows you to buy foreign stocks or ETFs directly and helps you save a few bucks in capital gains tax, you can lose out to currency conversion costs and charges related
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