You want to own Apple, Google, and Amazon without opening a US brokerage account. That's the dream international mutual funds promise.
But here's what most articles won't tell you: as of December 2025, you probably can't invest in these funds even if you want to.
At Belong, we've fielded dozens of calls from our UAE community members frustrated by this exact situation.
They find a great fund, complete KYC, and then discover fresh investments are blocked. This guide explains everything, the top funds, why they're restricted, how taxation works, and what alternatives actually work for NRIs today.
The SEBI Investment Cap: Why Most International Funds Are Closed
Let's address the elephant in the room first. Before you research which international fund to buy, you need to know if you can buy it at all.
SEBI and RBI have capped how much Indian mutual funds can invest overseas:
Limit Type | Amount |
|---|---|
Industry-wide limit | $7 billion |
Per-AMC limit | $1 billion |
Overseas ETF limit | $1 billion |
Source: SEBI
In January 2022, the industry hit the $7 billion ceiling. SEBI immediately restricted fresh investments in most international funds.
According to INDmoney, around 70 schemes in India focus on overseas investing, but their ability to accept new investments is constrained by these limits. By April 2024, even the separate $1 billion ETF limit was exhausted.
Current reality: No new lump-sum investments or SIPs are permitted in most overseas equity schemes unless redemptions create room within these caps.
👉 Tip: Always call the AMC helpline or check their website before starting KYC for any international fund. Many are technically "open" but not accepting fresh money.
What Are International Mutual Funds?
International mutual funds are equity funds that invest in companies listed outside India. Instead of buying Reliance or HDFC Bank, these funds buy shares of Microsoft, Tesla, or Nestle.
Most work as Fund of Funds (FoF). The Indian fund collects your money and invests it in an overseas fund or ETF. You get indirect exposure to global markets without needing foreign brokerage accounts.
Two terms to clarify:
International Funds: Invest only in companies outside India. Zero Indian exposure.
Global Funds: Invest anywhere, including India. They mix Indian and foreign stocks.
The Motilal Oswal Nasdaq 100 FoF, for instance, invests entirely in the Nasdaq 100 ETF in the US. You're buying a piece of Apple, Amazon, Google, and Meta without converting rupees to dollars yourself.
Top International Funds by Returns (December 2025)
These are the best-performing international funds based on 3-year and 5-year CAGR:
Fund Name | 3-Year CAGR | 5-Year CAGR | Expense Ratio | AUM |
|---|---|---|---|---|
Edelweiss US Technology Equity FoF | 39.72% | 13.59% | 0.44% | ₹1,800 Cr |
Mirae Asset NYSE FANG+ ETF FoF | 35%+ | 18%+ | 0.45% | ₹2,100 Cr |
Motilal Oswal Nasdaq 100 FoF | 20.98% | 20.00% | 0.22% | ₹6,211 Cr |
Franklin India Feeder US Opportunities | 18%+ | 16%+ | 1.60% | ₹3,500 Cr |
ICICI Prudential Global Stable Equity | 16%+ | 14%+ | 1.20% | ₹2,800 Cr |
Data sources: Angel One, Groww, Value Research as of December 2025
These numbers look attractive. But remember, most of these funds aren't accepting fresh investments due to SEBI limits.
Fund-by-Fund Breakdown
Motilal Oswal Nasdaq 100 FoF
This fund tracks the Nasdaq 100 Index, the 100 largest non-financial companies on the US Nasdaq exchange. Holdings include Apple, Microsoft, Amazon, Nvidia, Google, and Meta.
5-year return: 20% annually (Value Research)
Expense ratio: 0.22% (Direct plan), among the lowest in the category
AUM: ₹6,211 crores
Why it works: Low cost, tracks tech giants, strong long-term performance.
Risk: Heavy US tech concentration. When tech crashed in 2022, this fund fell harder than diversified alternatives.
Mirae Asset NYSE FANG+ ETF FoF
This fund mirrors the NYSE FANG+ Index, just 10 stocks: Facebook (Meta), Amazon, Netflix, Google, Apple, Tesla, Nvidia, and a few others.
Why it works: Direct exposure to the world's most influential tech companies. If you believe AI and digital transformation will continue driving growth, this fund captures that trend.
Risk: Extreme concentration. Only 10 stocks means one bad quarter from Apple or Nvidia significantly impacts returns.
Franklin India Feeder US Opportunities Fund
Unlike index funds, this is actively managed. It invests in the Franklin US Opportunities Fund, targeting innovative mid and large-cap US companies across technology, healthcare, and consumer sectors.
Why it works: Active management can identify opportunities passive funds miss.
Risk: Higher expense ratio (1.6%) reduces net returns over time. Active management doesn't guarantee outperformance.
👉 Tip: If you're comparing funds, focus on 5-year returns and expense ratios together. A fund returning 18% with 1.5% expenses nets you less than one returning 16% with 0.3% expenses.
Why Indians Invest in International Funds
Geographic Diversification
When Indian markets correct, global markets don't always follow. During certain market cycles, US tech recovered faster than Indian indices. Holding both reduces overall portfolio volatility.
Access to Global Leaders
The world's most valuable companies aren't listed in India. Apple, Microsoft, Nvidia, Amazon, and Google dominate global technology, AI, and cloud computing. International funds give you access without setting up foreign brokerage accounts or dealing with currency transfers.
Currency Advantage
When the rupee depreciates against the dollar, your dollar-denominated investments gain extra value when converted back to rupees. Over the past decade, this currency tailwind has added 3-5% annually to international fund returns for Indian investors.
Use our Rupee vs Dollar Tracker to monitor exchange rate trends.
Taxation: The Real Cost of International Funds
Here's where international funds lose their shine.
International mutual funds are not treated as equity funds for tax purposes. They're classified as non-equity funds because they don't invest 65% or more in Indian domestic equities.
Capital Gains Tax (FY 2025-26)
Holding Period | Tax Treatment |
|---|---|
Less than 24 months | Short-term gains taxed at your income slab rate (up to 30%) |
More than 24 months | Long-term gains at 12.5% flat (no indexation benefit) |
Source: AMFI
Compare this to domestic equity funds:
Holding Period | Tax Treatment |
|---|---|
Less than 12 months | 20% STCG |
More than 12 months | 12.5% LTCG on gains above ₹1.25 lakh |
The difference matters significantly. With international funds, even after 24 months, you pay 12.5% on all gains with no exemption threshold. With domestic equity, you get ₹1.25 lakh tax-free every year.
According to Finnovate, this tax structure change after July 2024 made international funds less attractive compared to domestic equity alternatives.
TDS for NRIs
If you're an NRI investing through an NRE or NRO account, TDS applies at redemption.
For non-equity funds (which international funds are):
Gain Type | TDS Rate |
|---|---|
Short-term capital gains | 30% |
Long-term capital gains | 20% |
Source: Equitymaster
You can claim refund of excess TDS when filing your ITR. If your country has a DTAA with India (UAE does), you may avoid double taxation.
👉 Tip: Plan redemptions across financial years to manage tax impact. If you're redeeming a large amount, consult a tax advisor to optimize timing.
The Parag Parikh Alternative: Best of Both Worlds
If you want international exposure with better tax treatment, consider Parag Parikh Flexi Cap Fund.
This fund invests up to 35% in foreign stocks (primarily US companies like Alphabet, Amazon, and Microsoft) while maintaining 65%+ in Indian equities. Because of the 65% Indian equity threshold, it qualifies as an equity fund for tax purposes.
Key numbers:
Metric | Value |
|---|---|
5-Year Return | 21.04% |
AUM | ₹1,29,783 Cr |
Expense Ratio | 0.63% |
Source: Value Research
Tax advantage: LTCG after 12 months at 12.5% with ₹1.25 lakh annual exemption, same as any domestic equity fund.
The trade-off: You only get 35% international exposure, not 100%. But for most investors, that's actually appropriate allocation anyway.
Side-by-Side Comparison
Factor | Pure International Fund | Parag Parikh Flexi Cap |
|---|---|---|
International exposure | 100% | Up to 35% |
LTCG holding period | 24 months | 12 months |
LTCG exemption | None | ₹1.25 lakh/year |
LTCG tax rate | 12.5% | 12.5% |
SEBI limit impact | Directly affected | Partially affected |
5-year returns | 16-20% | ~21% |
For many NRIs, Parag Parikh offers better risk-adjusted, tax-efficient exposure to global markets while maintaining India exposure.
GIFT City: The Better Alternative for NRIs
If you want unrestricted global exposure without SEBI limits, GIFT City funds are worth exploring.
GIFT City (Gujarat International Finance Tec-City) is India's international financial services center. Funds domiciled there operate under different regulations:
No SEBI overseas investment limits: GIFT City funds can invest freely in global markets without the $7 billion cap.
Tax advantages for NRIs: Capital gains from GIFT City funds are often tax-free for NRIs, depending on holding period and fund structure.
Dollar-denominated options: Many GIFT City funds accept and return investments in USD, eliminating currency conversion costs.
For example, the DSP Global Equity Fund available through GIFT City provides global equity exposure without domestic restrictions.
At Belong, we specialize in helping NRIs access these GIFT City options. Many of our community members have shifted from restricted domestic international funds to GIFT City mutual funds instead.
👉 Tip: Compare total cost and tax efficiency of domestic international funds vs GIFT City funds. For many NRIs earning in dirhams or dollars, GIFT City offers better post-tax returns with fewer restrictions.
Currency Risk: Understanding the Impact
Currency fluctuations can enhance or erode your returns.
When it helps: If you invested when USD/INR was 75 and redeem when it's 84, you gain approximately 12% just from currency movement, on top of fund returns.
When it hurts: If the rupee strengthens during your holding period, your dollar investments lose value when converted to rupees.
For NRIs earning in UAE dirhams or dollars, currency risk works differently. If you plan to keep money abroad or spend in dollars, rupee depreciation actually helps your India investments when measured in your home currency.
Historical context: The rupee has depreciated against the dollar by roughly 3-4% annually over the past two decades, providing a consistent tailwind for international fund investors.
Can NRIs Invest in International Funds?
Yes, with caveats.
NRIs can invest in Indian mutual funds (including international funds) through NRE or NRO accounts. The process requires:
- NRI KYC completion (passport, overseas address proof, attestation)
- NRE/NRO bank account linked to investments
- FATCA/CRS declaration for tax compliance
US and Canada NRI Restrictions
NRIs from the US and Canada face additional hurdles. Due to FATCA compliance costs, approximately 80% of Indian AMCs don't accept investments from US residents or citizens.
According to Zerodha's recent update, US and Canada NRIs are still not allowed to invest in mutual funds through their platform as of December 2025.
Nine AMCs still accept US/Canada NRIs: SBI, UTI, ICICI Prudential, Aditya Birla, PPFAS, Sundaram, Tata, Nippon, and Quant. But this requires additional documentation and compliance.
For US NRIs specifically, GIFT City investments may offer a cleaner path with less regulatory complexity.
👉 Tip: If you're a US NRI, confirm AMC acceptance before completing KYC. Getting rejected after submitting documents is frustrating and wastes time.
Who Should Invest in International Funds?
Suitable for:
- Long-term investors with 5+ year horizons
- Those seeking geographic diversification away from India
- High-risk-tolerant investors comfortable with volatility
- People who understand SEBI limits may prevent investing when desired
Not suitable for:
- Tax-conscious investors (unfavorable debt-fund taxation)
- Those needing liquidity within 24 months
- Conservative investors uncomfortable with currency and concentration risk
- NRIs in US/Canada (FATCA complications make GIFT City better)
How to Invest: Step-by-Step
For Resident Indians:
- Check fund availability first (call AMC or check website)
- Complete KYC through any KRA (CAMS, KFintech)
- Choose Direct plan for lower expenses
- Start SIP if lump-sum isn't accepted
- Plan for minimum 5-year holding period
For NRIs:
- Open NRE/NRO account if you don't have one
- Complete NRI KYC with overseas attestation
- Submit FATCA/CRS declaration
- Verify AMC accepts your country of residence
- Consider GIFT City alternatives if domestic funds are restricted
Common Mistakes to Avoid
Chasing Recent Returns
The fund returning 40% last year might not repeat. US tech's 2023-2024 rally was partly recovery from 2022's crash. Don't extrapolate recent performance.
Ignoring Taxation Impact
A 20% pre-tax return from an international fund could become 17.5% post-tax. A domestic equity fund returning 18% might net you more after accounting for the ₹1.25 lakh exemption.
Over-Allocating to International
Financial advisors typically suggest 10-20% of equity portfolio in international funds. Don't put 50% in US tech because it performed well recently.
Not Verifying Investment Availability
Many people complete KYC only to discover the fund isn't accepting investments. Always check current status with the AMC first.
Ignoring Currency Impact
Currency can add or subtract 3-5% annually. Factor this into expectations and timing decisions.
Alternatives Worth Considering
If international funds are restricted or taxation concerns you, consider these options:
MNC Funds
Funds investing in Indian subsidiaries of multinational companies (like Hindustan Unilever, Nestle India, Maruti Suzuki). You get indirect global exposure with domestic equity taxation.
GIFT City Mutual Funds
Unrestricted global investing with potential tax benefits for NRIs. No SEBI caps apply.
Liberalized Remittance Scheme (LRS)
Invest directly in US stocks through international brokers by remitting up to $250,000 annually. More complex but gives direct ownership.
Flexi Cap Funds with International Allocation
Like Parag Parikh Flexi Cap, these blend Indian and international exposure with equity fund taxation.
What Should You Do Next?
International funds can diversify your portfolio and give you global exposure. But SEBI restrictions and unfavorable taxation make them complicated in 2025.
Our suggestions:
- Check availability first before planning any international fund investment
- Consider Parag Parikh Flexi Cap for tax-efficient partial international exposure
- Explore GIFT City funds if you want unrestricted global access with better NRI tax treatment
- Limit allocation to 10-20% of your overall equity portfolio
Want to discuss which option fits your specific situation? Join our WhatsApp community where NRIs share experiences with global investing. Or download the Belong app to explore GIFT City mutual funds and compare NRI FD rates for safer portions of your portfolio.
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