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Disclaimer: I am not an expert by any stretch of imagination. So take the advice with a kg of salt and at your own risk.

I would suggest (equity) arbitrage fund and the reasons are as follows:

1. If you invest in debt funds/FD less than three years the gains are directly added to your income hence it is not tax efficient.

2. Short term lump sump equity investment is highly risky in the current environment. You will most likely end up destroying capital rather than making any reasonable gains.

3. Arbitrage funds are very safe and have the same tax treatment as equites. So if you are in the higher tax bracket they are very tax efficient.

4. The current market volatility may actually help arbitrage funds to deliver better returns.

Hi BHPians,
For diversification purpose, I was having a thought to invest in NASDAQ or S&P via Motilal Oswal Index Fund.

To a great extent, we cannot really track the macroeconomic situation of the US markets, like how we could do for Indian markets. Any suggestions if it make sense to invest, especially in the backdrop of Ukraine-Russian war?

MF AMC's in India including Motilal Oswal can not take fresh investments for International funds till RBI increases the 7 billion USD limit. So right now, you can not invest in those funds.

I don't expect RBI to increase the limit till crude oil prices come down.

Right now there are two ways to invest in international/US market-
1. Through domestic funds that have some allocation in US market like Parag Parikh Flexicap, Axis growth Opportunities etc.
2. Through ETF (ETFs have a separate RBI limit that has not been exhausted)

Restrictions apply to these funds as well, right?

Correct, these funds won't be able to make fresh investments into international markets. However they are allowing new lumpsum/SIP investments (unlike the dedicated international funds), so their percentage allocation to international equity would go down over the time.

Funds like PPFAS flexicap or Axis growth can't invest any more in foreign equity shares.

However, you can use funds, rather Fund-of-funds (FOFs) who invest in Overseas ETFs.
I am using Navi US total stock market fund - it invests in Vanguard's VTI ETF which has the lowest expense ratio.
If you are interested in Nasdaq, You can use the Kotak Nasdaq FOF which invests in a different Nasdaq100 ETF, but it has a much higher expense ratio.

Investment in Motilal S&P fund is not allowed because they buy the shares directly, not through any foreign ETF.

Hope this helps.

Which will be the best website to invest in mutual funds? Have used Paisabazaar.com but sometimes the site does not work properly. I understand if tomorrow even if paisabazaar.com shuts down my (meagre) investment done through them will remain safe. Am I correct or wrong here?

Thanks.

Your investments are actually with Mutual Fund houses (you are issued a Folio Number by each Mutual Fund). Paisa Bazaar or any such intermediary is just a conduit. So, those investments are as 'safe' as any other MF investment (i.e. subject to Market Risk).

If PaisaBazaar is not giving you a good experience, you can explore investing through directly on MF websites (requires creating online accounts and linking existing Folios) or use MF Utility https://www.mfuindia.com (refer previous pages for more details).

Hope this helps.

For people unaware, Motilal Oswal is going to pause even the ongoing SIPs in their S&P 500 and Nasdaq FoF from 01st April 2022. They had already stopped new application but now existing ones are being paused too.

I believe the only remaining opportunities for US funds are Navi US stock market and ICICI / Kotak Nasdaq Funds but I believe the cap of the overseas investment is for all houses cumulative which means they too may stop new investments.

Also people who are investing in Parag Parikh Flexi Cap, please do understand that all your new investments are being done in Indian market and nothing is going to the US part anymore until the cap is lifted.

This part of your post is not right, agree on other points as I also mentioned above. There might be some limit imposed on overseas ETFs as well in future, but right now there is no cap on these funds.

Need some advice from the MF and Finance gurus here.

I started MF investments via ICICIDirect in 2014 (3 regular funds).
a. ICICI Prudential Bluechip Fund
b. UTI Flexi Cap Fund
c. Franklin India Focused Equity Fund

In Jan 2019, I stopped SIPs in all the above funds and moved to Direct funds via ET Money App. In this move, I did not renew the Franklin India MF, as I was not happy with the returns and moved to a different fund.

My question is - I am confused if I should sell all my Regular funds held through ICICI Direct and buy the equivalent Direct funds? In earlier times, this was a simple question. But with LTCG coming in to the picture, I am really confused.

1. Should I at all consider this move?
2. If yes, how should I go about it, to make it most tax efficient? Ideally I would like to pay 0 tax on this switch.
3. Is there any online tool available for this purpose?

By no means, I am a financial guru, but this is what I would do :)

I will not sell Regular funds and buy direct in one go, but

1) All my future redemptions that I anyway need to do will be from the regular funds till it is exhausted (this is also with assumption that there is no badly performing fund in my direct portfolio that needs a switch)
2) towards end of the financial year, if I have not reached 1 lakh exception limit in LTCG, I will just redeem enough to reach this number.

+1 to satnan.

Do not sell the regular funds just to switch to direct funds. Your tax outflow may be greater than what you may be gaining.

If you are doing a rebalance of your portfolio or you are withdrawing for some financial needs, then sell the regular funds. If you are not rebalancing or selling for some needs, sell them every year such that the long term gains is within the 1 lakh taxation limit and reinvest in direct funds.

Thanks @satnan


Wow. Excited to get a response from one of my inspirations @graaja sir. Also from the same city (Coimbatore). Thanks for the advice and all the inspirations.

I do not have any financial needs now to withdraw. Only reason would be to move away from regular funds. I looking at the lower rate of returns and tax liability to make a call. And would be greatful for some advice here.

I calculated my LTCG (including grandfathering of profits until Jan 31, 2018). Need advice on whether this is a worthwhile thing to do or not. So here is the data -

1. If I sell all my regular plans today, my LTCG liability would be INR 122,000.
2. Difference in NAV between Regular and Direct for the 3 funds -
a. ICICI Prudential Bluechip Fund (66.23 vs 71.34)
b. UTI Flexi Cap Fund (246 vs 258)
c. Franklin India Focused Equity Fund (65 vs 72)

With this new data, does it make sense for me to make the switch?

My 2 cents on this:
Not selling because you have to pay tax is bad idea. You pay tax for the profit you made. Its like saying i dont want salary because i have to pay tax. So dont worry about tax.
Since you plan to redeploy what you have sold, this is what i would do:
Have a minimum cut off point in mind below which you dont want to loose the profit you have made. Keep increasing this value if the market moves up. Lets say you are making 100% profit, lets say you choose a cut off point of 85%. If market goes up and your gain goes to 110%, then you increase your cut off to 95%. ( Just an example). That way you will gain if market moves up and you dont loose profit you made if market moves down. If your cut off point is hit, sell, pay the tax and look to start investment again in whatever fund you choose.