International investing for Indians: Mutual funds, GIFT City or direct stocks?

Indian investors have three main ways to access global markets: International mutual funds offered in India, funds based in GIFT City and direct investments through overseas brokerage accounts. The routes differ in how money is invested, which assets are available and how much administration falls on the investor.

International mutual funds offer a familiar starting point. Investors can buy units through Indian investment platforms and transact in rupees, while the fund provides exposure to overseas markets. Depending on the scheme, this could mean tracking a global index, investing in a particular country or gaining exposure to a specific sector.

Also Read: If you only own Indian stocks, what are you missing?


The convenience comes with limitations. Overseas investments by Indian mutual funds are subject to regulatory limits, and restrictions on fresh subscriptions have affected the availability of some schemes. Investors should check whether a fund is accepting new investments, examine its underlying holdings and compare its costs before investing. A fund labelled international may also have a narrower geographical or sector focus than its name suggests.

GIFT City provides another route through funds established in India’s International Financial Services Centre. These funds can offer exposure to overseas securities through a pooled investment structure. Their regulatory framework differs from that governing domestic mutual funds, making it important to understand the product rather than assume all international funds operate alike.

Investors may need to remit money in foreign currency under the applicable rules. Minimum investment amounts, fees, redemption terms and tax treatment can vary by product. Those details matter when comparing a GIFT City fund with a domestic mutual fund or a direct overseas investment.

Direct investing gives investors greater control over what they own. Through an eligible overseas brokerage platform, they can select individual foreign stocks or exchange-traded funds, depending on the markets and securities available. This can widen the investment universe, but it also means taking responsibility for researching each holding and understanding the platform’s charges, currency conversion costs and record-keeping requirements.

For resident individuals, remittances for permitted overseas investments generally fall under the Reserve Bank of India’s Liberalised Remittance Scheme (LRS). The scheme allows remittances of up to US$250,000 per financial year, from April to March, subject to applicable conditions. Investors should also assess the tax treatment and reporting obligations attached to their investments.

The right route depends on what an investor wants from an overseas allocation. Someone seeking broad exposure without selecting individual stocks may find a suitable mutual fund easier to manage. A GIFT City fund may appeal to investors whose needs fit its structure and terms. Direct investing may suit those who want to choose specific securities and are prepared to manage the additional responsibilities.

Before deciding, investors should look at their existing holdings, investment horizon, risk tolerance and the role overseas assets would play in their portfolio. Currency movements can affect returns, while investing across markets does not eliminate the risk of losses.

These practical considerations form part of The Economic Times’ International Investing Masterclass, led by Neil Borate. Borate, Co-founder and Editor-in-Chief of The Fynprint, brings more than a decade of experience in global markets. His previous roles include Personal Finance Editor at Mint and value research. His work in personal finance and investing provides the foundation for a session focused on the decisions Indian investors face when considering international exposure.

For Indian investors considering international exposure, understanding the available routes is a useful first step. The next is to compare the actual investments, costs and obligations involved before choosing one.

Register for FREE now!