Can a resident Indian invest in an overseas fund?
No, Indian investors cannot invest in funds overseas. But you don't have to feel disappointed as opportunities to invest abroad are slowly opening up. There are two funds in India, which invest in foreign securities. The first fund to exclusively invest in foreign securities has been Sun F&C Fixed Income Securities Fund International Plan, which was launched in May 2002. As the funds of Sun F&C are being taken over by Principal Mutual Fund the final nature of this fund is not certain. Most of the schemes of Sun F&C are being merged with that of Principal Mutual Fund. As Principal does not have a fund which invests in foreign debt securities the future of this scheme is not known. The other fund which invests overseas is Franklin India International Fund (FIIF), which was launched in December 2002. FIIF invests predominantly in US government securities. FIIF, however, does not invest directly in US government securities but through the Franklin US Government Securities Fund. This is a government securities fund run by Franklin Templeton's US-based parent AMC.
On the equities side there are no schemes at present which invest in foreign stocks. However, Principal Mutual Fund has filed an offer document for Principal Global Opportunities Fund. It is proposed that this fund will invest in foreign stocks. The universe of such stocks, is however limited as investments are only permissible in companies, which hold 10 per cent in a listed Indian Company. You can read more about this unique fund in our last issue.