Best Mutual Funds for NRI

Overview to NRI mutual fund investment

Top schemes of Equity funds, as well as Debt funds, are covered so that NRIs can think of building a proper portfolio. The decision to invest should only be taken:

• In congruence to your financial goals.
• As per your risk appetite.
• As per the asset allocation process.
• In case you are  inexperienced, take help of a professional in “professional way” (read pay his due advisory fees)

Can NRIs invest in Mutual Funds in India?

1. In most cases, the answer is Yes but NRIs based in the US & Canada face some restrictions in few AMCs. In the case of the USA due to tax issues, it’s really tough to invest in Mutual Funds. NRIs should have a word with a tax expert or a financial planner before funding in Indian Mutual Funds.
2. Even where Mutual Fund houses allow the investment they require a separate letter for making a lump sum investment or for starting an SIP.
3. In a few AMCs, it’s easy to invest but at the time of redemption, they create issues & ask for additional documents. So NRI should invest in Mutual Funds after getting proper guidance. NRIs will require lots of support during all phases of the investment.

Applicable Rules for NRI Mutual Fund Investments

NRI mutual fund investments are mainly governed by the Foreign Exchange Management Act 1999, commonly known as FEMA. As per the current provisions of the act, NRI is allowed to make investments into capital markets including direct stocks, exchange-traded funds (ETFs) and mutual funds subject to key terms/conditions. However, these investments are allowed only if certain conditions are met including performing fresh mutual fund KYC for NRI and setting up of a rupee-denominated NRE/NRO account.

Non-Resident External (NRE) and Non-Resident Ordinary (NRO) Accounts for NRI MF Investments

In the case of NRI investors, NRE and NRO accounts are the commonly utilized accounts and having either of them is a mandatory requirement if you plan to make mutual fund investments in India as a non-resident Indian. Both of these are rupee-denominated accounts i.e. the balance amount is in Indian rupees (after applicable conversion) irrespective of the currency in which the initial deposits were made. While both accounts are susceptible to rupee depreciation and are similar in many respects, there are a few key differences to consider when choosing one over the other:NRE account can be used to deposit foreign earnings into a rupee-denominated account, while NRO account can be used to hold income generated in India by an NRI from rent, dividend received, etc.

• NRE account balance is tax-free, whereas, NRO account balance is taxable as per your applicable slab rate.
• NRE account deposits can be freely repatriated, whereas, NRO account balances can only be partially repatriated (up to USD 1 million per year).
• You should keep in mind that any resident Indian accounts you might have had prior to attaining NRI status can easily be converted to an NRE/NRO account. This offers a simpler option for opening a new NRE/NRO account altogether.