[DigitalOne]

Originally Posted by Ananthang

Dear Bhpians

Need your view and help on a query. With Trump coming back in USA, I feel US Business and Stocks may have a good rebound this year, but I don’t have big funds to invest directly on different stocks. Hence wanted to choose a MF which invests in US stocks. Could you please suggest some?

I had the same thought process and so started investing in US market from Nov onwards. I did a lumpsum of 50K and have a 10k SIP per month in the below fund.

Originally Posted by DigitalOne

Today I dipped my toes into international funds by switching a moderate amount from Franklin Templeton's liquid fund to "Franklin India Feeder - Franklin U S Opportunities Fund". This is a bet that the US market and the dollar will do well under the new administration. Let us see how it goes .

In the last two months, the 60k investment has given a 2.89% absolute return. Standard disclaimers about past performance not being indicative of future returns apply . Similar to yours, this is not my core portfolio; this is just a small diversification.

[saket77]

Another one is MON100ETF or FoF- by Motilal Oswal.
Basically investment in Nasdaq 100. If you have D'mat account then you can buy the ETF, else go through the MF- FoF route.

[Naetik30]

For people interested in US market investing, I suggest opening an account with charles schwab and investing directly. You can directly transfer INR to USD and buy shares or ETFs.

Especially for folks employed with US companies in India and with RSUs, in case you want to diversify and sell your company stocks (RSU, ESPP), this is very useful. Say you are using Etrade for your company RSUs, you can open a Charles Schwab international brokerage account. Transfer funds from Etrade to Schwab account and buy shares or ETFs. Started doing this since November and buying SCHG and SPLG ETFs.

[Gsynch]

Originally Posted by Naetik30

Especially for folks employed with US companies in India and with RSUs, in case you want to diversify and sell your company stocks (RSU, ESPP), this is very useful. Say you are using Etrade for your company RSUs, you can open a Charles Schwab international brokerage account. Transfer funds from Etrade to Schwab account and buy shares or ETFs.

I am told that the as per the FEMA rules, one has to get the $$ from the same of the RSUs back into India within a prescribed time period (90 days?) and then transfer the money into International brokerage account to trade in shares or ETF in US exchanges.

[Naetik30]

Originally Posted by Gsynch

I am told that the as per the FEMA rules, one has to get the $$ from the same of the RSUs back into India within a prescribed time period (90 days?) and then transfer the money into International brokerage account to trade in shares or ETF in US exchanges.

As per rules, you need to bring the proceeds of sale back to India within 180 days if not reinvested. My suggestion is to immediately reinvest in other ETFs/Shares. This is permitted under the new OI rules notified by RBI (overseas investment rules).

Also, make sure to report all overseas holdings in the Schedule FA during tax filing.

Is it legal to re-invest foreign ESOP/RSU proceeds internationally?
In July 2024, the RBI published an updated Master Direction – Overseas Investment regulations (Ref: Page 6, point f). Under these regulations, it was clarified that any shares acquired or received under Employee Benefits Schemes (includes ESOPs/RSUs) are considered as Overseas Portfolio Investments as long as these shares are less than 10% of the total equity of the company (which they are 99% of the time).

Further, Overseas Portfolio Investments fall under the RBI’s Liberalized Remittance Scheme (see section 6) and can be re-invested in any other publicly-listed company within a period of 180 days from its sale (RBI circular is here, Ref: Page 10, point 17).

[ATTACH=03MD945692290C104C5595AEDAC89AE78788.pdf]RBI Circular[/ATTACH]

[TheRandomGuy]

Originally Posted by saket77

Another one is MON100ETF or FoF- by Motilal Oswal.
Basically investment in Nasdaq 100. If you have D'mat account then you can buy the ETF, else go through the MF- FoF route.

Isn't there a limitation on the total foreign investment any scheme can make?
Once they hit the limit, they cant take any more investments.

Does this rule apply to MON100 ETF too or not?

[DaptChatterjee]

Originally Posted by TheRandomGuy

Isn't there a limitation on the total foreign investment any scheme can make?
Once they hit the limit, they cant take any more investments.

Does this rule apply to MON100 ETF too or not?

International ETFs had a $1 billion limit (in addition to $ 7B on mutual funds) which has been exhausted in 2024. That's why MON100, FAANG & MASTOP50 ETFs are trading at 20-30% higher than their iNAV since new units are not generated.

[TheRandomGuy]

Originally Posted by DaptChatterjee

International ETFs had a $1 billion limit (in addition to $ 7B on mutual funds) which has been exhausted in 2024. That's why MON100, FAANG & MASTOP50 ETFs are trading at 20-30% higher than their iNAV since new units are not generated.

Thanks a lot for the response.

So my question is, is there really any benefit to investing in these funds now that they cannot buy more units and are essentially stuck at their current AUM.

The price is moving only because of the internal demand for the ETF and not the underlying asset.

[DaptChatterjee]

Originally Posted by TheRandomGuy

So my question is, is there really any benefit to investing in these funds now that they cannot buy more units and are essentially stuck at their current AUM.

The price is moving only because of the internal demand for the ETF and not the underlying asset.

AUM will still increase due to the appreciation of underlying assets i.e., the share holdings. Price is increasing not only due to supply-demand mismatch but also due to above mentioned reason. But we need to keep a close watch on iNAV. Lack of market makers can work both ways. If US market crashes for some reason, traded price of these ETF may go below their iNAV when traders panic. RBI, under new governor, may also revise the limit, allowing the AMC's to bring down the premium.

[dodge3p]

Originally Posted by DaptChatterjee

Price is increasing not only due to supply-demand mismatch but also due to above mentioned reason. But we need to keep a close watch on iNAV. Lack of market makers can work both ways.

Good info. I have a SIP going in Mirae FANG FoF ETF since its inception, Given the quoted scenario, is it advisable to continue this investment or redeem?

[DaptChatterjee]

Originally Posted by dodge3p

Good info. I have a SIP going in Mirae FANG FoF ETF since its inception, Given the quoted scenario, is it advisable to continue this investment or redeem?

Unless you need the money in short to medium term (within 3/4 years), there’s no reason to withdraw the money that’s already invested.

Whether you should continue the SIP or not is not an easy question to answer! Since the fund is closed for new investment, there’s no going back after stopping SIP. Nor can you choose any decent alternative, most funds with US exposure are closed for new investments. A couple of FOFs that are open, invest in active funds. The cumulative expense ratio (FOF+ underlying scheme) for these are much higher than a ETF FOF.

[hothatchaway]

Originally Posted by DaptChatterjee

International ETFs had a $1 billion limit (in addition to $ 7B on mutual funds) which has been exhausted in 2024. That's why MON100, FAANG & MASTOP50 ETFs are trading at 20-30% higher than their iNAV since new units are not generated.

Wonder what is SEBI's real agenda in placing caps on MFs investing in US securities. Investing in foreign markets (especially the US) is a legit means of diversifying investments. Using MF to do that is safer than direct equity exposure.

[DigitalOne]

Originally Posted by DaptChatterjee

International ETFs had a $1 billion limit (in addition to $ 7B on mutual funds) which has been exhausted in 2024.

My STP into "Franklin India Feeder - Franklin U S Opportunities Fund" is still going on fine every month, as of now.

Originally Posted by hothatchaway

Wonder what is SEBI's real agenda in placing caps on MFs investing in US securities.

Moreover, I can't understand why to have a $7B industry-wide cap. This is anti-competition. AMCs who launched their schemes early have an advantage and can crowd out the new entrants.

If they want to have caps on foreign investments, as a deterrent to foreign outflow of Indian money, they should be put relative caps (e.g. foreign funds AUM must be less than 10% of total AMC AUM), rather than fixed caps.

But yeah, simpler regulation means lesser government/SEBI jobs. We need DOGE.

[vaibhav_a_a]

Originally Posted by DaptChatterjee

International ETFs had a $1 billion limit (in addition to $ 7B on mutual funds) which has been exhausted in 2024.

Originally Posted by DigitalOne

My STP into "Franklin India Feeder - Franklin U S Opportunities Fund" is still going on fine every month, as of now.

Motilal Oswal Nasdaq 100 FOF has stopped debiting account towards SIP. I called them to check as well and they said neither lumpsum nor SIP will happen till ''next directive".

[DaptChatterjee]

Originally Posted by hothatchaway

Wonder what is SEBI's real agenda in placing caps on MFs investing in US securities. Investing in foreign markets (especially the US) is a legit means of diversifying investments. Using MF to do that is safer than direct equity exposure.

Originally Posted by DigitalOne

Moreover, I can't understand why to have a $7B industry-wide cap. This is anti-competition. AMCs who launched their schemes early have an advantage and can crowd out the new entrants.

If they want to have caps on foreign investments, as a deterrent to foreign outflow of Indian money, they should be put relative caps (e.g. foreign funds AUM must be less than 10% of total AMC AUM), rather than fixed caps.

I guess it's to control dollar outflow (from RBi, not SEBI), but it hurts since $250,000 LRS is still allowed. SO HNI can still invest but Retail (MF) can't.

Originally Posted by DigitalOne

My STP into "Franklin India Feeder - Franklin U S Opportunities Fund" is still going on fine every month, as of now.

Few FOFs of active funds are still allowing new investments. Started one in Edelweiss US technologies fund for better half (Franklin one is more diversified and probably a better choice). I have SIP in ICICI Nasdaq 100 index fund which has not stopped but neither can I increase SIP amount.

Originally Posted by vaibhav_a_a

Motilal Oswal Nasdaq 100 FOF has stopped debiting account towards SIP. I called them to check as well and they said neither lumpsum nor SIP will happen till ''next directive".

Judicious decision from AMC! This fund have given much higher return than Nasdaq 100 as it invests into the Indian ETF which appreciated more.