With Donald Trump all set to take over as the 47th US President, the markets in America reacted quite positively to the news. S&P 500 and Dow Futures hit a record high on Wednesday after the news of Trump’s victory became clear. In fact, Indian benchmark indices Sensex and Nifty 50 also rose over 1 percent after the Republican nominee reclaimed Presidency.
If you, too, want to get an exposure to the American equities, you can either get direct exposure by buying stocks via brokers here, or else, buy mutual funds or ETFs which invest in the US stocks or indices such as S&P 500.
This is what you can do to get exposure to US markets.
I. Investing directly via broker: There are some brokers in India who have a tie-up with brokers in the US. With their help, you can open trading account in the US and start investing in the US financial markets.
This form of investing mat turn to be quite costly since there are restrictions in the number of trades you can carry out. It also entails rate of conversion of currency (from INR to USD to INR). So, one should be mindful of these costs if you are opting for this route of investing in the US markets.
II. Investing indirectly via ETFs/ mutual funds: You can buy units of some mutual fund schemes which invest in the US stocks or benchmark index. There are some mutual funds which invest in the overseas markets.
These include ICICI Prudential US Bluechip Equity Fund, Edelweiss US Value Equity Offshore Fund and DSP Global Allocation FoF, among others.
III. Investing in US mutual funds/ unit trusts: With regards to permitting Indian mutual funds invest in overseas securities, Sebi had released a master circular on June 27, 2024.
As a follow-up act, Sebi released another circular on Monday wherein it stated that an Indian mutual fund is free to invest in those overseas fund or unit trusts which have an exposure to Indian markets so long as the exposure is capped at 25 percent.
And till the time this limit is breached, these funds are not allowed to accept fresh investment from Indian investors.
It is important to note that investing in US stocks is subject to the LRS (liberalised remittance scheme) limit which is $2,50,000 in a year. Additionally, if remittance exceeds the limit of ₹7,00,000 in a year, a 5 per cent Tax Collected at Source (TCS) is applicable. And taxpayers can claim this TCS back at the time of filing of income tax return (ITR).