How to invest in US stocks after Sebi's restrictions on overseas investment by mutual funds RCMFA

The Association of Mutual Funds in India (AMFI) had recently asked asset management companies (AMCs) to stop accepting fresh lump sum and SIP investments in schemes that invest in overseas securities. As mandated by the Reserve Bank of India (RBI), Indian mutual funds registered with the Securities and Exchange Board of India (Sebi) are allowed to invest overseas with an overall cap of $7 billion. Investments in overseas exchange traded funds (ETFs) have a separate limit of $1 billion. At present, the $7-billion limit has almost been reached, hence the pause on fresh investments. While Indian investors can directly invest in US stocks, as discussed below, the mutual fund route provides another avenue for the investors to invest in overseas companies and diversify their portfolios geographically. If you have been investing in overseas securities through the mutual fund route, this means that you can no longer make any fresh investments. However, you can continue with existing systematic investment plans (SIPs). Investing in the US markets through mutual funds — the cost aspect: One also needs to remember that there are two types of mutual funds that invest overseas. There are fund of funds, which are local mutual funds that invest in international mutual funds, and there are local mutual funds that invest in international stocks. The expenses ratio for fund of funds tend to be higher, as apart from a general India fund management fee, there is also a management fee for the underlying fund. Even if you invest in a fund that is not a fund of funds, the expense ratio could be 2% or higher.However, there are other options for Indian investors to invest in overseas markets.