SIP in International Funds

I have received an email from motilal oswal amc that says that international index funds will not be available for lumpsum investment from 10th March.

Want to know if I can start SIP in such funds in zerodha and what is the differnence between payment methods for AMC SIP and Zerodha SIP (since it is not mentioned in the zerodha support articles).

Quoting from Email:

Due to limited headroom available of investments in overseas funds/securities with effect from March 10, 2023, we are temporarily restricting fresh Lumpsum, Switch-in, Systematic Transfer-in, in the below schemes:

  1. Motilal Oswal S&P 500 Index Fund
  2. Motilal Oswal MSCI EAFE Top 100 Select Index Fund
  3. Motilal Oswal Nasdaq 100 Fund of Fund
    However, these restrictions do not apply to ongoing Systematic Investment Plans (SIPs), new SIPs, redemptions, Switch-out and Systematic Withdrawal Plans (SWPs).
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if I am not wrong. looks like only MO fund house closed it. Others should be able to accept isnt it?

Kotak and edelweiss had put in the restriction earlier than MO.

oh didnt know. I use Navi. they didnt stop yet. I am good for many years to come since it will take years for NAVI to breach that limit.

Since zerodha SIP is a lumpsum in the backend, will it continue once the AMC stops lumpsum on 10th March?

As per z support person I spoke to there is no difference in amc vs z SIP only Z SIP is flexible. Is he correct?

Don’t mean to rain on your parade but one question to ask yourself before starting SIP/ investing lumpsum in such funds is: what am I losing when I am not invested in overseas markets… If your return expectation is already reasonably met with investment options domestically, do you really need overseas market exposure and risks associated with it, such as the RBI restricting investments in MFs last yr by capping feeder funds’ foreign investment to $7 billion? There is no clarity from RBI on future restrictions…

(Posting as a generic comment (because too many ppl used to write in asking me questions on overseas investment)…

EDIT: i am not against international exposure… I am only asking to understand all the risks involved…

Before you venture out into international funds, are you aware about risks?

Primarily there are 2 risks at play.

  1. The usual Equity market related risk and associated VOLATILITY.

  2. The inter currency rate risk.

Out of the 2 above, please focus on point no. 2.

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diversification, dollar advantage, 50% of known capital markets AUM in US alone. Super power of the world. > 75 of top 100 tech firms in the world. Less corrupted than developing countries. Highly capitalistic country.

Apart from what @ranton137 has mentioned, Nasdaq is approx 25 to 29% lower to its peak. The corporates which are part of Nasdaq are world reneowned and there is no doubt on it. So when people say, buy low and sell high, is this not the time to be buying. Nasdaq may fall further due to increase in interest rate expected this month. Experts are saying, it could be 25 to 50bps, this might result in Nasdaq loosing further. If we do not buy now, then when. Hence it is a great opportunity to invest in Nasdaq and an hedge for INR depreciation.

The RBI restriction does not apply for MO Nasdaq 100 ETF, although there could be a variance from price sought and iNAV and there is no need to do SIP. If nasdaq falls, then buy. If not status quo remains…

Just to add on, for investors who want to hedge against INR depreciation, IDFC MF is coming out with a fund which will invest in a ETF in USA where the underlying is debt. This would be great for residents as their only choice was either invest in USD equity like nasdaq or invest in gold.

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