Most Indians invest abroad to get global exposure. Funds that track the broader markets like the S&P 500 or NASDAQ are popular options, and a few sophisticated investors go the extra mile and buy the Brazilian Ibovespa or maybe Hong Kong’s Hang Seng index. But beneath the surface, there’s an ocean of thematic ETFs that promise to put your money behind any story you can think of.

If you like dogs and cats, there’s an ETF that invests in pet-care companies, and ETFs tracking space companies are getting renewed attention after the announcement of the SpaceX IPO. Some ETFs track human vices like smoking, alcohol, weed, etc. You think of a story, and there’s likely an ETF around that theme.

But not all that catches the eye is a worthy investment. By the time you see a thematic ETF giving handsome returns, that theme might have already been in overvalued territory. While it’s a tricky space to navigate, investors seem to be loving it. There are 393 thematic ETFs listed on US exchanges managing $256 billion.

To give you a flavour of what these ETFs could be, here’s a curated walk-through of some interesting themes. None of these is an investment recommendation and consider these a sample of how any investment thesis can be wrapped within a ticker.

The pet care story

PAWZ, the ProShares Pet Care ETF, tracks something close to many people’s hearts – pet care stocks. It holds veterinary diagnostics companies, pet food manufacturers, and speciality retailers across 26 stocks in the US, UK, Canada, and Europe. Its biggest positions include Freshpet, Zoetis, and IDEXX Laboratories.

Americans spent $158 billion on pets in 2025. The story is easy to explain over a dinner table, but the investment thesis is far more nuanced. PAWZ lost 17.66% over the past year. Its three-year annualised return sits at 0.78%, and five-year returns at minus 8.69%.

During the pandemic in 2020-21, the US pet industry witnessed a minor boom. Pet spending surpassed $ 100 billion for the first time. The stocks in PAWZ started getting priced like high-growth technology companies. The market assumed that was the new normal.

It wasn’t. The 2020–21 surge in pet ownership wasn’t entirely organic. Government stimulus payments had temporarily expanded the pool of pet owners. By 2022, nearly one million fewer households had pets. Industry growth in the interim was largely inflation-driven, not volume-driven — input costs like meat were at their peak, which meant higher prices for consumers. PAWZ was priced for exceptional growth, and that exceptional growth didn’t happen.

It did not help that large retailers and e-commerce websites also entered the industry to compete with them. So was it a familiar investment? Yes. But a good one? Probably not.

Broad appeal, bumpy Ride

GAMR tracks the global video game value chain — publishers, GPU makers, gaming platforms, Nvidia, AMD and the like. SOCL holds the world’s biggest social media companies: Meta, Tencent, Alphabet, Reddit, etc. Both have lost money over the past five years — SOCL at −6.71% annually, GAMR at −0.14%. But zoom out to ten years, and the picture shifts. GAMR has returned 13.76% annually. SOCL, 9.38%.

Both funds are extremely volatile. GAMR returned +77.96% in 2020, then +14.65% in 2021, then −36.94% in 2022. SOCL gave +78.18% in 2020, then −12.79% in 2021, then −42.27% in 2022. An investor who put money into SOCL in January 2021 had lost roughly 50% by the end of the following year — not because social media stopped growing, but because Meta and Tencent, the fund’s two largest positions, fell simultaneously.

GAMR in 2022 told a different version of the same story. Global gaming revenue fell 4.3% as the post-pandemic hangover hit publishers hard. One bad year wiped out everything 2021 had built. A single bad year in these funds undoes two or three years of compounding in one move. Most investors typically enter after a strong year, absorb the crash, and exit near the bottom. That’s how a fund with a decent decade-long return produces poor outcomes for most people who actually hold it.

Making good returns here has required a different level of patience to deal with volatility, which most investors don’t have.

Bets on vices. Literally.

YOLO, the AdvisorShares Pure Cannabis ETF, holds US and Canadian cannabis operators. It rose 55.89% over the past year. But its five-year track record is a different story — the fund sits at −31% compared to five years ago. CNBS, the Amplify Seymour Cannabis ETF, tells a similar story: a 76% one-year return alongside a five-year annualised return of roughly −33%.

VICE, the AdvisorShares Vice ETF, takes a broader view — alcohol, tobacco, gambling. It holds Altria, British American Tobacco, and Ambev alongside a casino operator and, somewhat curiously, Nvidia via its gaming exposure. Its one and five-year returns have both been below 2%. But it has a different problem: its AUM is $7.25 million. ETFs typically need $33–40 million to reach break-even, which means VICE may be at high risk of liquidation. And that can happen on short notice.

For an investor holding VICE, when that notice arrives, they receive cash at the price on the liquidation date — regardless of when they had planned to sell. The gains are taxable. And they’re left with the reinvestment problem of figuring out where to put that money next. So it’s not just a low-returns risk. The bigger risk is whether the fund will even survive.

Then there’s the gap between YOLO’s 55% single-year rally and its poor long-term performance. These funds are not really bets on consumer demand — cannabis is already legal for recreational use in 24 states. What they’re actually tracking is the federal story: the law that would make cannabis bankable, normally taxed, and financeable like any other business. That law has not moved. So what you’re investing in is a timeline set by legislators, not markets.

And then the bets that paid

BOTZ, the Global X Robotics and AI ETF, holds the world’s most serious robotics companies — Japanese precision engineering giants like Fanuc and Keyence, Swiss industrial group ABB, and Intuitive Surgical, the company that automates operating theatres. It manages $3.7 billion in assets and has returned 29% over the past year.

QTUM, the Defiance Quantum ETF, goes a step further. It holds roughly 85 companies across quantum hardware, semiconductors, and machine learning — spread thin enough that no single name dominates. Over the past year, it returned 88%. Over five years, it has compounded at roughly 28% annually.

And then there’s UFO, the Procure Space ETF. When it was listed, some publications called it the worst ETF launch of the year. It holds rocket manufacturers, satellite operators, and geospatial data companies. Then SpaceX filed its IPO prospectus with the SEC on May 20, 2026. UFO returned 165% in a single year. Space ETFs pulled in $1.3 billion in a single month. The so-called worst ETF launch of 2019 had become one of the best-performing funds of 2026.

The pattern across all three is interesting. The market is paying the most — and by a significant margin — for the future. And that’s where investors get confused, because it’s not easy to bet on something that might happen.

What thematic ETFs are actually saying

Step back from the nine funds and something becomes clear. Every thematic ETF is a bet on one thing: the match — or mismatch — between what the market believes today and what reality looks like in the future. PAWZ bet that pandemic-era pet spending was the new normal. YOLO bet that federal cannabis reform was imminent. UFO bet that space was investable before anyone believed it was.

Some bets paid off. Some didn’t. Before you think about owning any of these themes, a much deeper analysis may be prudent. A few considerations to keep in mind.

Start with cost. The average thematic ETF charges 0.63% annually, against 0.03% for a plain S&P 500 index fund. That’s a 20x premium for a product that usually underperforms it. Only 5 of 393 thematic ETFs are currently beating the S&P 500.

Then there’s timing. The funds that worked in this piece had one thing in common: they existed before their stories did. UFO stayed mediocre for six years. QTUM was silent for five. Both rewarded patience that most investors don’t have. Investors generally arrive at a theme only after the early returns have already been captured.

Such thematic ETF holdings can also get confusing. For instance, ARK Investment Management’s Space Exploration and Innovation ETF, known as ARKX, which promises to put 80% of its assets in space exploration and innovation, has Netflix as part of its holdings. The logic is that ‘more people might stream video if satellites bring fast internet to rural areas.’

For Indian investors, there’s additional operational overload. Most of these funds aren’t available through Indian mutual fund wrappers, which adds a further layer of complexity — LRS, TCS, Schedule FA reporting, US capital gains rules — making this a high-risk, low-probability option for most retail investors here.

All in all, thematic ETFs are not a gimmick. They’re a price tag on a story. The important part is watching how much that story costs, and how close — or far — it gets from reality. Read them that way, and these funds become a lot more interesting.

ETF return data as of 29/05/2026 via Morningstar

Share Vantage Point by Ionic Wealth

Your new job’s offer letter just landed in your inbox. Along with a solid cash salary, the tech company has also offered RSUs of its US-headquartered parent company. Curious, you pull up the company’s stock chart, and the excitement quickly fades away. The company’s stock has fallen nearly 20% from its peak last year.

What seemed like a lucrative part of your compensation now begs the question: what are you supposed to do with it?

In a falling market, stock-based compensation, like Restricted Stock Units (RSUs) or Employee Stock Ownership Plan (ESOPs), may not feel worth it. However, to dismiss stock-based compensation when prices fall is no different from holding on to them blindly in a rising market, without evaluating what role they can play in your overall portfolio.

Over time, these RSUs and ESOPs have the potential to build into a significant portion of one’s wealth. In the case of foreign RSUs or ESOPs, they come with the added advantage of providing global diversification to one’s portfolio.

On the other hand, if the same employee wanted a direct exposure to these global stocks, it would come with additional costs and regulatory restrictions.

Global diversification

For employees receiving RSUs or ESOPs in a foreign-listed company, the exposure to global markets comes without the usual friction of investing abroad.

Take RSUs, for instance. When they vest, shares are transferred directly to the employee’s foreign demat account. There is no exercise price to pay, meaning the employee does not need to buy them using upfront cash. The fair market value (FMV) of the shares on the day of vesting is treated as a perquisite and taxed as salary income at the employee’s applicable income tax slab in India.

Say you are in the 39% tax bracket and have been granted 100 shares worth $100 each. In that case, $10,000 is treated as salary perquisite, and tax of $3,900 is payable in India.

Most of the employers will sell a portion of the vested shares to cover the Indian tax liability and the remaining shares are credited to your foreign brokerage account.

A similar sell-to-cover method is used for ESOPs too. Since ESOPs require the employee to pay an exercise price, a portion of the shares is sold to fund both the exercise cost and the tax liability.

In both cases, there is no separate outflow from your bank account to acquire these shares. Even after sell-to-cover reduces the number of shares you finally receive, you still benefit as you are acquiring the stocks at a discounted price than the FMV in the case of ESOPs, and no cost in the case of RSUs.

Compare this with investing directly in US stocks. You need to remit money abroad under the LRS. Banks typically charge a forex spread of around 1-3% over the interbank rate. On top of that, there can be outward remittance charges. Once the money reaches the brokerage platform, you may pay a commission per trade or a flat platform fee to a foreign broker.

With stock grants, that friction doesn’t exist, and the exposure builds over time as grants vest.

That said, stock options should not be mistaken for diversification in the pure sense. While the geography is different, the exposure is still concentrated in a single company.

Your salary and bonus already depend on the company’s business performance. On top of that, RSUs or ESOPs add another layer of exposure to the same stock. So a large part of your income and wealth is effectively tied to one company, and each vesting event increases that exposure.

Moreover, foreign stocks are generally USD or Euro denominated, and therefore, if the rupee weakens against these currencies, then you may be at an advantage.

One practical approach is to decide in advance how much exposure as a total percentage of your total global portfolio size or net worth you are comfortable with. Once that threshold is crossed, you can start trimming and diversifying systematically. Even partial selling at each vesting cycle can change the risk profile significantly over time.

How to approach your foreign RSUs and ESOPs

It’s crucial to understand the difference between how RSUs and ESOPs are structured.

RSUs are relatively straightforward. They are free-of-cost award stocks tied to a vesting schedule, usually spread over a few years. Vesting means the shares are released to you over time, based on conditions like continued employment, performance targets, promotions or other milestones. Once a tranche vests, the shares are directly transferred to your demat account and there is no buying price.

In listed companies, RSUs are effectively a guaranteed payout, as long as you stay through the vesting period.

Unlisted companies also offer RSUs. In such cases, while the shares are granted at a nil exercise price after the vesting period, employees cannot freely sell them. Liquidity is typically available only during specific events such as an IPO, buyback, or secondary sale.

Whether you are offered ESOPs or RSUs, it is important to read the fine print, as it can materially affect what you finally get.

Another clause to watch is whether vesting is back-loaded across multiple years, meaning a smaller portion vests early and a larger portion vests later. This structure is designed to improve retention, because leaving early can mean losing a large part of the grant.

Also pay attention to clauses that define what happens to your stock options during events such as acquisitions, demergers, resignation or termination.

For professionals receiving RSUs or ESOPs in foreign-listed companies, the arrangement offers a meaningful structural edge over peers trying to build global exposure on their own.

Together, these three advantages make foreign stock-based compensation far more than a line item in an offer letter. When managed thoughtfully, it can become one of the most efficient wealth-building tools available to the salaried professional.

With inputs from Hardik Mehta, Lead-tax at Ionic Wealth

Disclaimer: The information contained in this post is provided for informational purposes only and should not be construed as tax, legal, or investment advice. Viewers are advised to consult their independent tax, legal advisors and financial consultants for guidance specific to their individual circumstances. Angel One Investment Services Private Limited ("Ionic Wealth") is an AMFI-registered Mutual Fund Distributor (ARN 306165)

Silver is the best conductor of electricity, but if you open the plastic cover of wires around you, you will find copper inside.

While silver is technically the best conductor of electricity, it was simply too expensive. In the real world, copper was more reliable.

In short, that’s how the red metal became the backbone of many industries and sectors.

What happened after that is somewhat interesting. Over time, the red metal became good at predicting the overall health of the economy.

So when copper prices go up, analysts start taking it as a sign of an improving global economy. It usually means that industries are demanding more copper and anticipating more consumption. When it goes down, the opposite happens: it signals a weak economy.

In fact, Wall Street analysts gave the nickname 'Dr Copper' to copper for its ability to predict the economy. That’s why copper is commonly known as the only metal with a PhD in economics.

Current State

Right now, Dr Copper is at a crossroads. On one hand, copper demand is rising, but at the same time, the supply is shrinking.

Let’s first talk about demand. Beyond everyday use, copper is being increasingly used in new-age industries.

• Renewable energy sources like wind, solar, and geothermal use up to 7 times more copper than fossil fuel-based power plants.

• Electric vehicles need about 2.9 times more copper than traditional gas cars.

• Hyperscale AI data centres can use up to 10 times as much copper as regular data centres.

As these new-age industries grow, so does the demand for copper. But that’s just half the story. What’s happening on the supply side is something to take notice of.

To begin with, the closure of the Strait of Hormuz has cut off roughly half the world’s supply of sulphur that is transported by sea.

Sulphur is required to make sulphuric acid, and this acid is commonly used to extract copper from copper ores. Think of them like rocks containing a tiny percentage of copper. Through a process called ‘heap leaching’, sulphuric acid is used to extract a small amount of copper from these copper ores.

With no fast alternative extraction method available, copper mines in Chile and Africa that depend on continuous sulphuric acid supply face shutdown within weeks of exhausting their existing inventory.

That said, the Strait of Hormuz is a short-term disruption. Over the longer run, the outlook deteriorates.

1. Ore grades have dropped 40% since 1991, meaning miners extract less copper from every tonne of rock.

2. New discoveries have dried up. Of all copper deposits found in the last 35 years, only 6% were discovered in the last decade.

3. Even when you do find a deposit, it takes an average of 17 years to go from discovery to actual production.

No surprise, then, that S&P Global forecasts copper production peaking at 33 million tonnes in 2030 against a total demand of 42.3 million tonnes. That translates to a 10 million tonne copper deficit by 2040, even after accounting for recycled copper.

Copper’s investment use case

The past year has been brutal for equity investors in India. Nifty 50 lost one per cent in the past 12 months (as of April 27, 2026). But there's one asset class that's been doing the heavy lifting — commodities — and they're barely on the retail investor's radar.

As of March 2026, Silver has delivered annualised returns of 79.18% over the past two years. Gold: 50.33%. Dr Copper gave a humble 20.08%. These returns are in dollar terms, and if you factor in the rupee’s depreciation, the numbers look even stronger.

But here’s the catch. India is effectively a two-commodity market: Gold and Silver ETFs. There’s no ETF for copper. No platinum ETF. No aluminium ETF.

Even if you believe in the copper story, it gets hard for you to get exposure to the copper via an ETF in India.

Storage issues. India’s gold and silver ETFs hold actual metal in regulated vaults. That’s fine, because gold and silver are high-value and easy to stash.

But copper is bulky and far less valuable per kg. The value of gold that can be stored in the size of a pea requires the equivalent of roughly 110 kg worth of copper bars to store the same value. Copper also easily gets oxidised, which makes it even more difficult and expensive to store.

Lack of regulated spot price. Any ETF needs a reliable, SEBI-approved benchmark to calculate what one unit is worth each day. While Gold and silver recently shifted to domestic MCX spot prices, copper doesn't have one for now.

MCX trades futures for copper, but futures reflect what the market expects the price to be in the future, not what it is today. Copper MCX volumes are also limited, and a lack of liquidity can lead to sharp price swings

MCX copper’s average open interest is around 26,000 metric tonnes. An ₹800-crore ETF would require positions equivalent to nearly one-third of this market, potentially distorting prices and increasing impact costs during monthly rollovers. Far-month contracts—essential for ETF stability—are thinly traded.

Moreover, only about 21% of MCX copper participants are hedgers; most are short-term traders, limiting long-term liquidity. While linking the ETF to global exchanges like the LME or CME could solve this, current regulations do not permit such structures.

Source: Moneycontrol

High GST rates: While gold and silver attract a 3% GST, copper attracts an 18% GST rate. Creating a physical copper-backed ETF will bake in those high GST rates and drag down the investor’s returns.

Indian mindset. Gold and silver have centuries of cultural weight as stores of wealth. Copper, on the other hand, is what your wiring and plumbing are made of. Almost all copper trading on MCX today is done by institutions and speculators, not retail investors.

Where to find?

Domestically, your options are thin. One option is to directly buy copper stocks, but then you’re taking on company-specific risk. Or you can invest in the Nifty Metal Index, which is too broad and gives you a bundle of metal companies, not pure copper exposure.

Instead, investors may use their Liberalised Remittance Scheme (LRS) to get exposure to copper via US-listed ETFs. Commodity ETFs in developed markets are far more developed and more reliable tracks copper prices along with higher liquidity.

Three copper ETFs worth knowing about:

1. United States Copper Index Fund (CPER): Tracks copper futures directly. Pure copper price exposure.

2. Global X Copper Miners ETF (COPX): A basket of copper mining companies.

3. Invesco DB Base Metals Fund (DBB): Diversified exposure to copper, aluminium, and zinc.

How to structure your portfolio

Copper has earned its place alongside gold and silver, not as a replacement, but as a complement. The long-term demand story is hard to argue with: The world needs more copper for electrification, and supply is just not keeping up.

But copper is a cyclical industrial commodity and not the best store of value. Investors may use copper as a satellite position in their portfolio. Volatility will also be significantly higher than gold.

For Indian investors, the playbook is simple: use domestic ETFs for gold and silver, use LRS for copper. Stay disciplined and don’t chase the rally. Build the position over time.

Lastly, Investors should also note that US estate taxation is applied to US assets held by Indians. It means that upon death, a non-resident of the US (like Indians) needs to pay up to 40% as estate tax on US situs assets beyond $60,000.

With inputs from Ankita Pathak, Chief Macro and Global Strategist, Ionic Wealth.

Disclaimer: The information contained in this post is provided for informational purposes only and should not be construed as tax, legal, or investment advice. Viewers are advised to consult their independent tax, legal, and financial consultants for guidance specific to their individual circumstances. Angel One Investment Services Private Limited ("Ionic Wealth") is an AMFI-registered Mutual Fund Distributor (ARN 306165)

Back in 2008, the RBI set a $7 billion cap on the amount the entire mutual fund industry could invest overseas. At the time, it seemed more than enough.

Indian investors rarely looked beyond domestic markets, and they had good reasons to look inward. After all, the Indian stock market delivered some of the best returns from 2003 to 2018.*

However, things started to change during the Covid pandemic. Global markets produced champions in industries that barely exist in India. From then on, investors slowly began warming up to the idea of investing globally.

At that time, mutual funds were the easiest and most seamless route for Indians to invest abroad. AMCs capitalised on this by launching many NFOs for international mutual funds and ETFs.

Fast forward to 2022, and the $7 billion limit that mutual funds as an industry could invest overseas was exhausted. ETFs had a separate overall industry limit of $1 billion, which was also exhausted.

Once the industry limit was breached, domestic mutual funds investing overseas could no longer accept fresh inflows. New money can come in only if room opens up through investor redemptions or a fall in the value of overseas holdings.

That is why many international mutual funds stopped accepting new inflows. You can still buy international ETFs, but there is a catch — many of them now trade at a premium to their underlying NAV.

In today’s article, we’ll break down the different ways Indians can invest globally and examine each route from multiple vantage points.

(P.S. We won’t cover direct stock investing here.)

Way to go global: LRS

Most of you may already be familiar with the RBI’s Liberalised Remittance Scheme. The central bank allows each individual to remit up to $250,000 abroad every financial year for various purposes.

Unlike the mutual fund industry’s $7 billion overseas investment cap, which has remained unchanged since 2008, the RBI has raised the individual LRS limit over the years.

It started at $25,000 in 2004, was raised to $100,000 in 2007, and eventually to $250,000 in 2015, where it stands today.

Apart from investing via domestic mutual funds, all other routes to global investment require individuals to use their LRS limits.

GIFT City: Think Global, Act Local

GIFT City was set up in 2015 to rival global financial hubs like Singapore and Dubai, with a special regulatory regime for cross-border finance.

GIFT City funds are becoming popular both as a way for Indians to invest abroad and as instruments through which NRIs and foreigners can invest in India.

While most funds channel foreign capital into India, outbound funds meant for Indians looking to invest abroad are seeing steady growth in numbers.

CAT-3 AIFs

The number of CAT-3 AIFs in GIFT City has surged to 135 as of March 2025, up from just 23 in June 2023. This includes both inbound and outbound funds.

Various funds have different strategies, and they can also diversify across different geographies as per its investment mandate.

Investors also don’t have to report their GIFT City funds in their income tax returns under Schedule Foreign Assets (FA), as GIFT City funds are domiciled in India. That said, it is advisable to still report them to be on the safer side.

For investors looking to invest more than $250,000 in a financial year, GIFT City AIFs are an interesting proposition. By routing investments through a company, LLP, or registered partnership, investors can allocate up to 50% of the entity’s net worth to a GIFT City fund via the Overseas Portfolio Investment route.

Notably, investments made through the OPI route can flow only through funds domiciled in GIFT City.

The minimum ticket size for such funds is typically $150,000. However, investors with an accredited investor certificate can start investing for as low as $10,000.

GIFT City PMS

Unlike AIFs, a portfolio management service (PMS) is not exactly a scheme but works more like an advisory service. The manager customises the portfolio based on the investor’s requirements.

The minimum ticket size is typically $75,000. Like AIFs, investors with an accredited investor certificate may be able to invest with a lower minimum.

The PMS structure also allows better utilisation of the LRS limit. When a CAT-3 AIF books profits on a foreign stock, the gains are recorded in a foreign currency. However, the tax has to be paid to Indian authorities in rupees, which may require converting some dollars back into rupees.

In a PMS structure, the underlying securities are held in the investor’s own broking account. This means that unless you buy a foreign security, you do not need to use up your LRS limit. When a foreign stock is sold and profits are booked, the investor can keep the gains in dollars while using rupees to pay the capital gains tax in India.

Note that since the underlying assets are held in the investor’s account, any foreign assets and income must be reported under Schedule FA while filing tax returns. Non-disclosure of foreign assets or income can lead to penalties under the Black Money Act.

Additionally, US-situated assets held directly by Indians can attract an estate tax of up to 40% on amounts above $60,000 in the event of the investor’s death. This risk does not arise with AIFs, since the securities are held at the fund level rather than in the investor’s individual name.

GIFT Retail Funds

The minimum ticket size of GIFT retail funds is much lower. The first two outbound retail funds from GIFT City had a minimum ticket size of $5,000.

The main unique selling proposition of such funds is their low-ticket size. If the investment amount and overall LRS remittance is lower than ₹10 lakh in a financial year, no TCS is applicable.

For context, TCS simply acts as an advance tax that can be adjusted while filing returns, although it temporarily locks up cash. TCS credit can also be used via an employer to offset against salary TDS.

However, apart from a handful of funds, there are not many retail funds to choose from at the moment. As low-ticket-size funds become more popular, there will hopefully be more launches in this category.

Non-GIFT City Routes

Apart from GIFT City, you can also open an overseas brokerage account or invest directly in funds abroad using your LRS limits.

Global ETFs (US)

If you want to invest in global markets, you don’t need to open a brokerage account in every country.

For instance, If you want to invest in Brazil, you don’t need to open a brokerage account there, you can simply open a US brokerage account. You can buy an ETF in the US that tracks the Ibovespa (BVSP), Brazil’s benchmark index.

The US is by far the most developed ETF market in the world. Bloomberg estimates suggest there were about 4,300 ETFs in the US as of August 2025. There are now more ETFs than individual stocks traded in the US.

While we have taken the US as an example, you can do the same with ETFs listed in other countries, provided you have a brokerage account that allows you to invest there.

Undertakings for Collective Investment in Transferable Securities (UCITs) is a popular fund structure based out of the EU. Many UCITs are traded on exchanges as ETFs and are therefore available at a low ticket size.

Note that if you are buying an asset situated in the US, such as an ETF, the estate tax for Indians can go up to 40% on US-situated assets above $60,000. If you have a large asset base in the US, this can become a major roadblock. This doesn’t apply to UCITs since they are domiciled outside the US.

Indian investors are also subject to a 25% withholding tax on dividends from US stocks and ETFs. So, if a stock or ETF pays a $10 dividend, $2.50 is withheld by the US. The dividend must still be reported in India and can be used to offset taxes payable in India.

Global Funds

Investors can also access global funds housed in popular jurisdictions such as Singapore, Mauritius, Ireland, Luxembourg, Dubai (DIFC), and Delaware (a state in the US), among others.

Like GIFT City funds, these global funds give investors exposure to global markets. However, the OPI route, through which investors can remit more than $250,000 in a financial year, is only available for GIFT City funds and not for funds based out of these countries.

Not all investors may have access to such funds, as distribution may be limited in India. Since these funds are not based in the US, the 40% estate tax will not apply.

Ionic View

Many investors are now actively seeking global exposure in their portfolios, and GIFT City funds are emerging as a popular choice for this purpose. Operating under the Indian regulatory framework, these funds are specifically designed for Indian investors, and they represent the only route through which investors can deploy more than $250,000 a year overseas via the Overseas Portfolio Investment (OPI) route.

Under the Liberalised Remittance Scheme (LRS), every individual gets an annual limit of $250,000 to remit abroad for various purposes. This limit resets on April 1st, so investors who haven’t fully utilized this year’s quota still have a short window to do so.

It's worth noting that LRS remittances made for investments attract a 20% Tax Collected at Source (TCS) on amounts exceeding ₹10 lakh in a financial year. Since the LRS limit resets on April 1st, investors who remit ₹10 lakh before March 31st and another ₹10 lakh after April 1st can utilize ₹20 lakh across two financial years, with each tranche staying within the TCS-free threshold.

Beyond the annual limit, GIFT City funds also help investors build a long-term dollar corpus outside India. For instance, one approach for parents planning to fund a child's overseas education could be to gradually accumulate dollars through these funds, with the proceeds potentially used toward future expenses. As with any investment decision, this is best evaluated in the context of one's overall financial plan and goals.

With inputs from Hardik Mehta, Lead-Tax at Ionic Wealth

*Past performance is not indicative of future results