How to Invest in Mutual Funds From India

Investing in India or any foreign market may feel like a fool's errand if you don't have much market expertise to back up purchases. Mutual funds come to the rescue, allowing investors the opportunity to profit from India without in-depth knowledge of the Indian market. With a mutual fund from India, investors can pool their money with that of others and benefit from the market and investing expertise of a professional manager.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• Internet access
• Financial advisor or broker
• Money to invest

Indian Mutual Fund Types

1. Understand open-end mutual funds from India. These funds offer liquidity and the opportunity to purchase and sell shares at prices related to their net asset values (NAVs). They do not have a fixed maturity date.

2. Know that closed-ended options do have fixed maturities, ranging from 2 to 15 years. When these funds are initially introduced, you can invest in them directly. After the initial issue period, you can purchase them on the stock market.

3. Recognize that interval options combine features of open and closed-end funds. Shares of these funds from India may be traded on the stock market or bought and sold at set intervals.

Collecting Information

4. Understand that investing in foreign markets can offer you potential for capital growth and income. However, there are special risks involved with investing overseas.

5. Determine whether market exposure to India already exists in your portfolio.

6. Discuss your objectives, risk tolerance and investment time horizon with a financial adviser or broker. Determine what portion of your portfolio to contribute to mutual funds from India.

7. Understand that mutual funds from India may be affected by world events, as well as political and economic changes.
   

8. Realize that there is currency risk involved when you invest in mutual funds from India.

9. Visit MorningStar.com or Lipperweb.com and research mutual funds from India.

10. Obtain prospectuses and performance information on the funds that interest you. Read them carefully before you decide to invest.

11. With the help of your financial adviser or broker, determine the funds that best suit your needs and decide how much to invest. Purchase shares through your advisor or broker.

Tips & Warnings

• Though it is possible to invest in mutual funds from India without help from an investment professional, these professionals can help you to avoid costly mistakes.
• Generally, mutual funds that focus on one foreign country only are considered very risky. They are generally not recommended for investors in need of a great deal of investment security.

[srfreeman]

on 11/16/2008 There are a few inaccuracies in this article:

1) Unless the U.S. investor is an NRI (Non-Resident Indian)or PIO (Person of Indian Origin) who can get PAN Card (Indian tax I.D. #) it is impossible for Americans to legally buy mutual funds from India.

2) Closed-end funds do not have fixed maturities ranging from 2 to 15 years. This is incorrect.

3) Indian mutual funds from India are not covered by either Morningstar or Lipper. U.S. listed India-focused funds are covered by these firms.

4) Americans can buy a number of India-focused SEC registered mutual funds sponsored and advised by U.S. SEC registered investment advisers that are listed on U.S. exchanges.

5) I am the CEO of EM Capital Management, LLC and the Co-Portfolio Manager of the EM Capital India Gateway Fund (EMINX), an open-end India-focused mutual fund. Please feel free to visit www.emcapitalmanagement.com