What are Mutual Funds for NRI/ OCI/ PIO?
Mutual funds are investment options that allow Non-Resident Indians (NRIs), Overseas Citizens of India (OCIs), and Persons of Indian Origin (PIOs) to pool their money with other investors for investing in a diversified portfolio of stocks, bonds, or other securities.
These market-linked funds are managed by professional fund managers and allow the NRI/ PIO/ OCIs to:
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Earn potentially high returns
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Participate in the Indian financial markets
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Diversify their investments
The fund managers also ensure compliance with relevant regulations and guidelines for foreign investors.
Mutual funds cater to the unique investment needs and preferences of NRIs, making them an attractive option for wealth creation and financial planning.
5 Mutual Fund Houses Offering Online Mutual Fund Investments to NRI/ OCI/ PIOs in USA in 2024
Investing in Indian mutual funds can be a great way for NRIs/OCIs/PIOs in the USA to grow their wealth and participate in the Indian economy. However, regulations for US and Canadian NRIs can be stricter than for NRIs in other countries. Here are 5 Mutual Fund houses that offer online investment options for NRIs/OCIs/PIOs in the USA:
Mutual Fund Houses Allowing NRI/ OCI/ PIOs in USA to Invest in Mutual Funds with Physical Presence in India
There are a few fund houses in India that have restrictions regarding online investments for NRIs (Non-Resident Indians) residing in the US and Canada. Let us learn them below:
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360 One Mutual Fund
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Axis Mutual Fund
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DSP Mutual Fund (restrictions apply only to lump sum investments)
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ITI Mutual Fund (restrictions apply only to lump sum investments)
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Kotak Mutual Fund
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Navi Mutual Fund
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NJ India Mutual Fund
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PPFAS Mutual Fund
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SBI Mutual Fund
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Taurus Mutual Fund
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White Oak Capital Mutual Fund
These limitations are only for online transactions. You can still invest in the best mutual funds in India offline.
Alternative Solutions:
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Power of Attorney (PoA): You can authorize someone in India to manage your investments on your behalf through a PoA.
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Invest through platforms accepting US/Canada NRIs: Several platforms cater specifically to NRIs, so explore those options.
Read Here: NRI vs. OCI
5 Best Mutual Funds†† in India in 2024 for NRI/ OCI/ PIOs in USA:
Some of the top mutual fund investment options to consider for NRI/OCI/PIOs in the USA in 2024 are listed below:
| Fund |
1-Year Return |
5-Year Returns |
| Aditya Birla Sunlife Flexicap Fund |
14.73% |
11.45% |
| Navi Nifty 50 Index Fund |
15.71% |
13.96% |
| Quant Active Fund |
10.80% |
11.72% |
| Quant Small Cap Fund |
4.15% |
10.22% |
| UTI Mastershare Fund |
15.60% |
12.63% |
Disclaimer: †† Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is done in alphabetical order (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
Details of Best Mutual Funds to Invest in India for NRI/ OCI/ PIOs
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Navi Nifty 50 Index Fund
The Navi Nifty 50 Index Fund is an index fund offered by Navi Mutual Fund that invests in the Nifty 50 index. The Nifty 50 index is a benchmark index that tracks the performance of the 50 largest companies listed on the National Stock Exchange of India.
Features of Navi Nifty 50 Index Fund:
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Investment Objective: To match the performance of the Nifty 50 Index by investing in the stocks of the companies listed in it. The goal is to track the index's returns while minimizing any deviation closely.
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Fund House: Navi Mutual Fund
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Launch Date: 15 July 2021
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Benchmark Index: Nifty 50
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Net Asset Value (NAV): Rs. 14.47
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Fund Manager: Aditya Mulki
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UTI Mastershare Fund
UTI Large Cap Fund is a Large-Cap Equity fund launched in 1986. It is one of the oldest mutual funds in India. The fund invests in leading companies with large market capitalization. The fund manager looks for companies that are available at a reasonable valuation considering their expected earnings growth.
Features of UTI Mastershare Fund:
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Investment Objective: To match the performance of the Nifty 50 Index by investing in the stocks of the companies listed in it. The goal is to track the index's returns while minimizing any deviation closely.
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Launch Date: 15 Oct 1986
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Benchmark Index: S&P BSE 100 India
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Net Asset Value (NAV): Rs. 244.17
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Fund Manager: Karthikraj Lakshmanan
Read Here: How to plan retirement income in India?
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Aditya Birla Sunlife Flexicap Fund
The Aditya Birla Sun Life Flexi Cap Fund is a mutual fund scheme offered by Aditya Birla Sun Life Mutual Fund. It is a very high-risk fund that invests in a mix of large, mid, and small-cap stocks.
Features of Aditya Birla Sunlife Flexicap Fund:
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Investment Objective: The fund aims for steady growth and income by mostly investing in stocks (90%) and a small portion in bonds and money market securities (10%). It will use both top-down and bottom-up strategies for investing and allocate funds to IPOs, emerging sectors, and other new market opportunities.
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Launch Date: 23 Dec 1994
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Benchmark Index: Nifty 500
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Asset Holdings: 98.9% Equities, 1.10% Cash Holdings
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Net Asset Value (NAV): Rs. 1,696.79
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Fund Manager: Harish Krishnan, Dhaval Joshi
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Quant Small Cap Fund
The Quant Small Cap Fund is a small-cap mutual fund scheme offered by Quant Mutual Fund. It invests in a portfolio of small-cap companies, with the primary objective of seeking capital appreciation and providing long-term growth opportunities.
Features of Quant Small Cap Fund:
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Investment Objective: To grow money by investing in various small companies to boost capital.
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Launch Date: 15 Apr 1996
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Benchmark Index: NIFTY Smallcap 250
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Net Asset Value (NAV): Rs. 263.58
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Fund Manager: Sanjeev Sharma, Vasav Sahgal, and Ankit A Pande
Check Here: NRI Tax in USA
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Quant Active Fund
The Quant Active Fund is a multi-cap equity mutual fund offered by Quant Mutual Fund. It invests in a portfolio of large, mid, and small-cap companies across various sectors. The fund's objective is to generate capital appreciation and provide long-term growth opportunities for investors.
Features of Quant Active Fund:
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Investment Objective: To increase capital over the long term while also generating income by investing in a diverse range of large, mid, and small-sized companies.
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Launch Date: 15 Apr 1996
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Benchmark Index: Nifty 500 Multicap 50:25:25
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Net Asset Value (NAV): Rs. 699.12
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Fund Manager: Sanjeev Sharma, Vasav Sahgal, and Ankit A Pande
Mutual Fund Laws and Regulations for NRI/ OCI/ PIOs
Investing in mutual funds in India are subject to specific laws and regulations for Non-Resident Indians (NRIs). Here are some key points regarding these regulations:
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Eligibility: NRIs, as well as Persons of Indian Origin (PIOs) and Overseas Citizens of India (OCIs), are eligible to invest in Indian mutual funds.
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KYC Compliance: NRIs must complete the Know Your Customer (KYC) process, which involves providing necessary documents, such as:
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Identity proof (PAN Card, Passport),
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Overseas Address proof,
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Passport-sized photograph,
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OCI Card (when foreign passport holder).
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Repatriation: NRIs can invest in both repatriable and non-repatriable mutual fund schemes. Repatriable funds can be transferred back to the foreign account of the NRI, while non-repatriable funds cannot be repatriated abroad without certain restrictions.
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Currency: Investment can be made in Indian Rupees (INR) or foreign currency, depending on the specific mutual fund scheme.
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NRE/NRO Accounts: An NRI can use the Non-Resident External (NRE) or Non-Resident Ordinary (NRO) accounts to invest in Indian mutual funds. NRE accounts are used for repatriable investments, while NRO accounts are for non-repatriable investments.
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Taxation: Tax rules vary depending on the type of mutual fund and the investor's residential status. Capital gains tax, dividend distribution tax, and other income tax laws may apply.
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PAN (Permanent Account Number): NRIs must obtain a PAN card in India for tax purposes. It is essential for mutual fund investments.
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FEMA Regulations: The Foreign Exchange Management Act (FEMA) governs foreign investments in India, including mutual funds. NRIs must comply with FEMA regulations when investing.
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Nomination: NRIs are encouraged to nominate a nominee for the mutual fund investments. This simplifies the transfer of investments in case of the investor's demise.
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RBI and SEBI Regulations: Investments are subject to regulations issued by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI).
Check Out: Best SIP Plans for NRI
Challenges to Investments in India for NRIs in USA/ Canada
Indian mutual fund houses encounter significant problems when trying to attract investments from Non-Resident Indians (NRIs) based in the United States and Canada. First, let us understand this law here:
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FATCA (Foreign Account Tax Compliance Act)
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This is a United States federal law that imposes rigorous reporting requirements on foreign financial institutions, including Indian mutual fund houses.
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Compliance with FATCA necessitates extensive documentation and meticulous reporting to the Internal Revenue Service (IRS), making it a complex and resource-intensive process.
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This documentation includes their US Taxpayer Identification Number (TIN) or their Global Intermediary Identification Number (GIIN).
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Other Challenges for US and Canadian NRIs:
US and Canadian NRIs may face the following challenges when investing in Indian mutual funds:
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Difficulty in obtaining a FATCA TIN or GIIN
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Lack of awareness of FATCA requirements
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The reluctance of mutual fund houses to accept FATCA investors
Which Mutual Fund is Best for NRIs?
When it comes to selecting mutual funds for NRIs (Non-Resident Indians), it's essential to consider several factors, such as your investment goals, risk tolerance, investment horizon, and the taxation implications in both your home country and India.
Following are a few considerations to help you find the right mutual fund:
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Consider Investment Goals: Choose funds aligning with your objectives - equity, debt, or hybrid.
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Check Fund House Reputation: Opt for reputable fund houses with strong performance records and transparent processes.
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Understand Tax Implications: Be aware of tax rules in both India and your home country for NRIs.
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Ensure Regulatory Compliance: Pick funds that are compliant with SEBI regulations for NRIs.
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Evaluate Transaction Ease: Look for funds offering hassle-free online transactions and NRI support.
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Account for Currency Fluctuations: Factor in currency fluctuations as they impact returns, especially during repatriation.
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Seek Diversification: Choose funds offering diversification across assets, sectors, and geographies.
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Compare Expense Ratios: Lower expense ratios can boost long-term returns.
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Summing It Up
For NRIs, OCIs, and PIOs looking to invest in India, the best mutual funds are those that align with their financial goals, risk tolerance, and investment horizon. Diversified equity funds, balanced funds, and international funds can offer attractive opportunities. However, it is essential to conduct thorough research, consider professional advice, and ensure compliance with regulatory requirements before making investment decisions.
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