Does it makes sense for people in countries with low interest rates like in US if I am not wrong has around 3% to 5% interest rate to invest in India’s corporate debt funds which yields more than 9% to literally make free money? Or are there regulatory restrictions for getting funds at those rates for investment in these assets?
What about the inflation? Indian rupee is a weak currency and investment by fii’s in corporate funds are done when the dollar index is heading lower.
Good point but in last 5 years in USDINR has been in the range of 63 to 76 rs per USD. Is that too much of a risk?
5 years ago it was around 68 now it is 73 that is around 10% devaluation of INR. But what if they average it out by doing investment periodically?
I am not sure if I make sense.
What you are saying is usually referred as carry trade. You can learn more about it by googling this term.
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@Rohan_K in usa interest rate are almost zero but, but never think Americans are considering to invest in other countries to fedge 9 % returns , never
Never compare usa market and indian market ,
in USA intrest rate are almost zero , but americans are not investing in FD or Debt fund , they are investing in covered call ETF its giving returns almost 12 % every year , this kind of ETF are very popular , these ETF are managing billion of dollars , even i also invested around 3 lakhs in these ETF for diversification and maintaing my portfolio return @18 %
this covered call ETF will not affect by Interest rate risk , every month 1% return on every month 25th date they will give dividend and same its will credit to your broker account , no americans will not invest in bank FD , because i live 5 years in USA , covered call ETF are very popular in USA there is 100s of ETF is AVAILABLe , BEST IS QYLD AND NUSI ETF fetching returns like 8 to 12% consistenly every year
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Is it available in india ?
Can resident Indians invest in covered call etf in USA ; as per FERA and LRS scheme as per RBI rule ?
@siva
@RLM you can open direct TD Ameritrade account from India all online process only , don’t open any broker tie up these are limited option only they are providing , you can open online hassle free account opening in TD Ameritrade it’s zero account zero commission , you can transfer amount through IDFC first bank if you transfer today morning tommrow morning the amount will credit there
By spirit of circular it is not allowed but maybe one can buy it, I am not sure.
is there any covered call ETFs in india ?
Even they invest in indian for higher interest rates atlast they’ll be same after taxes
I tried searching about this and things aren’t as simple as that when it comes to taxes for FPIs. They are given many exemptions (ranging from complete exemption from every kind of tax when investing in specific sectors to exemptions from paying taxes for particular types of activities (like derivatives trades) when they register in specific jurisdictions like GIFT city, Mauritius, Singapore). A few recent headlines about this -
In case you are interested, these articles talk about those things in much more detail -
*Refer to Page 3 of the above PDF (Most of these changes are stemming from a newly passed Act called Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020)
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