International mutual funds stop fresh SIPs: How investors can still get global exposure

For Indian investors looking to diversify beyond domestic markets, investing in US and global stocks through mutual funds has become increasingly difficult. Fresh SIP registrations and lump-sum investments in most international mutual fund schemes have been closed, not because of poor fund performance, but because of regulatory limits on how much Indian mutual funds can invest overseas.

The Securities and Exchange Board of India (SEBI), in coordination with the Reserve Bank of India (RBI), has set strict caps on overseas investments by Indian mutual funds:

• $7 billion – total limit for the entire mutual fund industry to invest in foreign securities
• $1 billion – separate limit for overseas ETFs
• $1 billion – maximum limit per Asset Management Company (AMC)

“These limits were introduced to protect India’s foreign exchange reserves and manage currency volatility. When large amounts of rupees are converted into dollars to buy foreign assets, it impacts capital flows and the rupee’s stability. To control this, SEBI and RBI capped the total overseas exposure of the mutual fund industry,” said Madhupam Krishna, a SEBI-registered investment adviser and founder of WealthWisher Financial Planners and Advisors.

“But by early 2022, the industry had fully utilised the $7 billion limit for non-ETF overseas investments. Later on, the separate $1 billion limit for overseas ETFs was also nearly exhausted,” said Krishna.

Once these ceilings are hit, SEBI directs mutual fund houses to stop accepting fresh inflows into international schemes that would increase their overseas exposure beyond the permitted limits.

The result is a frustrating situation for investors: an existing international SIP may continue depending on the scheme, but starting a new one becomes difficult or, in many cases, impossible.

“Major AMCs such as PGIM India, Franklin Templeton, Edelweiss, Nippon India and others have suspended or severely restricted fresh inflows into their international schemes. Effectively, no major international mutual fund route is reliably open for new SIPs,” said Krishna.

Most recently, Edelweiss AMC closed fresh SIP registrations & paused existing SIPs and STPs with effect from 12 Aug 2026. While Baroda BNP Paribas Aqua Fund is open for new SIPs, HSBC Mutual Fund will also resume fresh/additional investments in three overseas-focused schemes from today, 2026, after temporarily suspending subscriptions. Investments through lump sum, SIP, STP, switch-ins and IDCW transfers will be allowed up to Rs 2 lakh per PAN per month.

So, if mutual funds are no longer a dependable route, what can investors do? There are still alternatives, although each comes with its own costs, limitations and compliance requirements.

How can you invest in international stocks?

International ETFs listed in India

These funds are also subject to a $1 billion cap and are often constrained to an index or commodity, such as US Nasdaq 100 ETFs or global gold ETFs.

“Most international ETFs tracking foreign indices are treated as non-equity funds. This means that, to qualify for LTCG, the holding period must be more than 36 months, with a tax rate of 20 percent with indexation. STCG applies when the holding period is less than or equal to 36 months and is taxed as per the slab rate,” said Krishna.

Investors should also check the market price of these ETFs against their underlying value, as some can trade at a premium because of demand-supply imbalances.

Direct overseas investing

“Investors can also directly access overseas equities and ETFs under the RBI’s Liberalised Remittance Scheme, which currently permits resident individuals to remit up to $250,000 per financial year for permitted transactions,” said Pallavi Desai, Head Client Relations, Aikyam Capital Pvt. Ltd.

While this opens up a much wider investment universe, investors also need to consider taxation, compliance, transaction costs and, importantly, who will advise and manage these investments.

Global portfolios via overseas brokers

Platforms such as IBKR, Vested and others allow investors to access overseas equities and ETFs within LRS limits. However, these platforms can involve additional costs, while minimum investment requirements can also be a deterrent. Some platforms require an initial investment of $5,000.

There can also be operational limitations around joint accounts and nominations on some platforms, which can make claiming assets challenging in the event of the account holder’s death.

Both direct investing and overseas broker-based investments are treated as foreign assets held in the investor’s personal capacity. Hence, investors need to report them while filing tax returns in the FA Schedule.

Outbound funds via GIFT City

Both residents and NRIs can invest in outbound funds, including MFs, PMS and AIFs, through the GIFT City structure. Residents can invest only within their LRS limits. However, the paperwork and KYC process can still be tedious, particularly for NRIs who are not present in or visiting India. “The choice of funds is also limited, with only around four to five funds currently available. Minimum investments in retail outbound funds can range from $500-5,000, while PMS/AIF options can start at $75,000,” said Krishna.

Indian companies with global exposure

Another option is to invest in India-focused strategies with significant overseas revenue exposure, such as Indian IT, pharmaceutical companies and MNCs. “This is not the same as owning foreign stocks, but it can provide indirect exposure to global economic activity and international revenues,” added Krishna.

Domestic mutual funds with overseas equity exposure

Investors can also consider domestic mutual funds that allocate a portion of their portfolios to overseas equities. These are not substitutes for dedicated international funds, as most of their assets remain invested in Indian stocks. However, they can provide some degree of global diversification without requiring investors to open an overseas account or remit money abroad.

Experts note that, for most such funds, overseas exposure is in the range of 10–15 percent. Therefore, investors looking for some international exposure do not necessarily need a fund with 100 percent overseas allocation; a domestic fund with a meaningful foreign-equity component can also play a role in a diversified portfolio.

Also read: The Rs 82 lakh price of waiting: Why your first year of mutual fund SIP matters more than your last

What investors must understand

The choice of route should depend on the investor’s portfolio size, risk appetite and investment horizon. “Direct overseas investing can provide a wider investment universe. Still, investors also need to account for currency movements, taxation, remittance and transaction costs, and additional compliance requirements before deciding the appropriate route,” said Desai.

For investors, experts say that there is no one-size-fits-all replacement for international mutual funds. The right route will depend not only on access to overseas markets, but also on costs, taxation, convenience, compliance and how much international exposure the overall portfolio actually needs.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.