Last updated: 07 Sep, 2021 | 04:44 pm
There was a time when Indian investors had to struggle to invest in the US equity market. Times have changed, and now investors can invest in US equity through mutual funds or directly buy stocks. In this report, we have tried to analyse the difference between investing directly in US stocks versus buying US stocks through mutual funds.
For this comparison, basis we have taken some of the best Indian Mutual Funds investing in US markets namely:
For directly investing into US markets we have considered:
Invest in US stocks: Analysis
Let’s look at what would happen if you invest Rs 10 lakh in some leading international Mutual Funds vs investing in FAANG and ETF.
Post-tax and post expenses returns assuming an initial investment of Rs 10 lakh
Expenses incurred while investing through international Mutual Funds vs US ETFs and US stocks (based on Expense ratios)
While at first sight the expense ratio of 1.3%-1.63% may seem insignificant, they can impact your returns over a long-term time horizon. The infographic below shows how much of your returns are eaten up the the massive expense ratios charged by Indian mutual funds investing in US:
The expense ratio of just 1.3% can cost you around 1.34 lakh when compounded for 5 years. But if we compare that to directly investing via the ETF route we have to pay as less as Rs 9,769 for 5 Years and no expense cost for buying direct US equity.
Impact of Taxation on returns
The additional expenses for investing directly in US Stocks via INDmoney (Currency Conversion & Withdrawal)