InvestorQ : Can an Indian buy tax-saving international mutual funds?
sanjana Tulsiani made post

Can an Indian buy tax-saving international mutual funds?

shivangi Arora answered.
3 years ago
People getting aware of investment options around the world, the need for portfolio diversification is more significant than ever. A diverse plan not only spreads the risks but also provides earning potential of different markets.
An international mutual fund invests in assets around the world excluding the home country. It is also called overseas or foreign funds. International funds offer an excellent opportunity for diversifying and earning returns by being a part of the growth of companies around the world.

Like any other type of investment, investing abroad has its own set of risks and benefits.
In India, International funds are taxed as debt funds or non-equity funds, unless they invest at least 65% of their portfolios in Indian equity instruments. Hence, gains from international funds are taxed at the investor’s marginal rate of tax if they are sold within three years from the date of purchase. The gains realized from the sale after 36 months are taxed as long term capital gains and eligible for indexation benefits in the year of sale.

These are considered as some of the best international funds in India:
Franklin India Feeder Franklin US Opportunities Fund.
It is a seven-year-old fund that was launched in 2012 and has given an attractive return of approx. 13% to 16% over the last 5 and 3 years.

ICICI Prudential US Bluechip Equity Fund.
This scheme has succeeded in emerging as one of the best international funds in India and has outperformed its benchmark over the last 1 year.

DSP US Flexible Equity Fund.
DSP US Flexible Equity Fund has been around for more than 6 years as part of the international fund segment and 3 year and 5-year returns of the scheme have been recorded at 13.15% and 10.57% respectively.

Motilal Oswal NASDAQ 100 Exchange Traded Fund
The scheme has generated attractive returns of -3.31%, 17.97%, and 16.15% over the last 1 year, 3 year and 5 year periods respectively.

Aditya Birla Sun Life International Equity Fund.
As of October 2019, the scheme had generated returns of 12.25% and 7.41% over the 3 years and 5 year periods.