As an Indian investor if you are looking to diversify geographically and invest in the US stocks, here is an option from SBI Mutual Fund. The fund house is launching SBI International Access-US Equity FoF, the NFO period of which is ending on March 15. The fund is an open-ended fund of funds scheme investing in a mutual fund scheme or ETFs that invest in the US markets, which are domiciled overseas. For the first time purchase, the minimum application amount is Rs 5,000 and even NRIs can invest in this fund provided they are not residents of the United States of America or Canada.
The underlying scheme will be Amundi Funds-US Pioneer Fund, (domiciled in Luxembourg) that invests predominantly in the US market securities. The scheme will invest 95%-100% of its net assets generally in Amundi Funds-US Pioneer Fund (including ETFs) which invests predominantly in the US markets.
The total expense ratio to be charged over and above the weighted average of the total expense ratio of the underlying scheme shall not exceed two times the weighted average of the total expense ratio levied by the underlying scheme. For example, if the underlying scheme is charging 0.75%, then the FOF cannot charge more than 1.5%. In this case, the TER of FOF (including the expense of the underlying scheme) will be 2.25%.
International investing provides investors with the opportunity to benefit from any depreciation in the Indian currency against the currency of the underlying fund.
To an Indian investor who has only invested in Indian companies listed on Indian stock exchanges, this fund provides international diversification to the portfolio and provides investors with the opportunity to invest in themes not available in the Indian market, such as Tesla, Amazon, disruptive tech, among others.
Not all global economies move in tandem and there is always an opportunity to gain from stronger economies such as that of the US. Some exposure to international funds also brings in the advantage of diversification to one’s domestic portfolio. However, one should consult a financial advisor and evaluate one’s risk appetite before investing in this or any other mutual fund scheme for long term goals.