Direct stock, mutual funds and ETFs: Ways Indian investors can choose the right route to invest in US markets

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When Indian investors look outside their home market, the US is usually where the conversation begins. And fairly so. It gives you access to businesses that dominate globally, whether it’s technology, healthcare, or consumer brands. Over long periods, that market has created serious wealth.

“The allocation I like the most is 70 percent equity, 20 percent fixed income, and 10 percent precious metals or other hard assets. Within the 70 percent equity allocation, about 20 percent should be in global equities,” said Vaibhav Porwal, Co-founder at Dezerv.

So the real decision isn’t about whether to invest there. It’s about how you choose to enter.

There are three clear routes today. Direct stocks, mutual funds, and ETFs. Each works, but not in the same way for everyone.

Let’s start with direct investing

Direct investing means buying US stocks yourself through an overseas brokerage account, giving you full control over what and when you invest. Also, one can invest via GIFT City, which offers a simpler route for Indian investors. It allows access to US markets through Indian platforms like NSEIX Global Access, India International Exchange, etc., often with easier paperwork and potential tax efficiency. This makes it attractive to those who want global exposure without directly managing foreign accounts, while still benefiting from diversification beyond India.

But that’s also where the challenge lies. “It is not just about buying a good company. You are dealing with currency movements, global interest rates, sector rotations, and sometimes risks you don’t fully see from India. Many investors start with enthusiasm, but tracking consistency becomes the real test,” said Ajay Kumar Yadav, CFPCM, Group CEO & CIO Wise Finserv.

Then comes the mutual fund route

This is an easier way to invest. A professional fund manager takes those calls for you. Asset allocation, stock selection, and rebalancing are all managed within the fund. For most investors who want exposure but don’t want to track markets every week, this works better.

In such a scenario, you pay for that management, and you may not always get the sharpest returns that a single winning stock could have delivered. Also, at times, regulatory limits can restrict fresh flows into international funds, which investors should be aware of.

Investing in international funds is not always easy because the RBI sets an overall limit on how much money can be invested abroad. Once this limit is reached, fund houses stop accepting fresh investments, making these funds temporarily unavailable. As a result, even if you want to invest, you may not always find these options open.

The third option is Global ETFs

This is the simplest to understand. You are not trying to beat the market. You are just participating in it. If the S&P 500 grows, you grow with it. Costs are lower, transparency is higher, and there’s no dependency on a fund manager’s calls.

“ETFs come with their own quirks. Liquidity can be patchy in some cases, and tracking errors do show up, especially in India-listed international ETFs,” said Yadav.

Some examples are Motilal Oswal Nasdaq 100 ETF, Mirae Asset NYSE FANG+ ETF, Nippon India ETF Hang Seng BeES, Mirae Asset S&P 500 Top 50 ETF, Motilal Oswal Nasdaq Q 50 ETF

So what should an investor actually do?

According to experts, gift city is one of the best ways to invest in foreign stocks.

This is because the number of mutual fund options for international investing are extremely limited because of the limit of $7 billion. “Moreover, some of these funds are which are specifically investing in ETFs are trading at a substantial premium to the NAV. Fund of Funds which are investing in these ETFs are available at 15 to 20 premium to the value of underlying ETFs. Pricing is not efficient,” said Vaibhav Porwal, Co-founder at Dezerv.

If you, however, prefer a more guided approach, mutual funds offer comfort and structure. If simplicity and cost matter most, ETFs do the job cleanly.

Yadav said, “In many cases, a mix works well. Keep a core allocation through funds or ETFs for stability, and use a smaller portion for direct ideas where you have conviction.”

One more thing that often gets missed is currency. When you invest in the US, you are also taking a call on the dollar. Over time, that can help cushion rupee depreciation, but in the short term, it can swing both ways and add to volatility.

For instance, over the last six months, the rupee has weakened from around Rs 88.8 per dollar in September 2025 to about Rs 93.7 per dollar in March 2026. That is a fall of roughly 5 to 6 percent, which means the dollar has strengthened, which in turn means boosting returns for Indian investors holding US assets.

However, global investing is not about chasing the next big US stock story. It’s about balance. About making sure your portfolio is not dependent on just one economy. And more importantly, choosing a route you can stick with even when markets are not cooperating.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.