Global feeder funds shut? Here's how to go global now

With feeder funds closed to fresh money and ETFs trading at a premium, first-time investors must look beyond the usual routes. Three experts explain what to do.

With Indian markets largely flat, some investors are sitting tight and waiting for markets to move up. Others are looking abroad. Remittances by resident individuals for equity and debt investments abroad under the Liberalised Remittance Scheme (LRS) stood at $456.69 million in July 2026, up about 192 per cent from $156.19 million a year earlier, according to the Reserve Bank of India (RBI) Bulletin of September 2026.

 

But the easiest routes are blocked. Most global feeder funds run by Indian mutual funds have paused fresh inflows after the industry exhausted its overseas investment limit. Exchange-traded funds (ETFs) that invest abroad face a related problem. Since new units cannot be created, they trade at a premium to their actual value. The average premium across India-listed international ETFs has generally been 15-20 per cent over the past year, but it has risen sharply since early September. For example, at its peak on September 18, one fund, the Motilal Oswal NASDAQ Q 50 ETF, traded at a premium of 235 per cent . The BSE has since cautioned investors that those buying at steep premiums face the risk of an abrupt price fall unrelated to the underlying assets.

 

For beginners, three decisions follow: how to get money out, what to buy first, and what to add later.

 

How do you get money out?

 

There are two main routes. Neil Borate, cofounder of global investing advisory platform Thefynprint, favours going direct. "The cheapest way is to remit money and open an account with a US broker. It costs less than alternatives like GIFT City funds, including on tax, and it gives you access to the entire universe of US-listed stocks and ETFs,” he says.

 

Borate adds that the US platform also opens other countries. “The US is the mother market. It also lists ETFs that track other countries, so you don’t need to open accounts in Brazil or Vietnam to invest there. A US-listed ETF does that for you.”

 

Vaibhav Shah, head of products, business strategy and international business at Mirae Asset Mutual Fund, says the direct route has a catch. “This route, however, offers no professional management or curated investment choices. Investors must select securities, manage risk and handle cross-border compliance/taxation issues on their own, which may not suit every investor.”

 

His pick is GIFT City. “GIFT City has emerged as a compelling alternative,” he says. It offers professionally managed funds, and resident individuals can invest up to $250,000 per person per financial year under the LRS. Alternative Investment Fund structures need a minimum of more than $150,000, while retail schemes start from $500, depending on the fund.

 

Whichever route you pick, watch the total cost. Viram Shah, founder and CEO of Vested, says: “The most cost-effective way to invest globally is not necessarily the product with the lowest expense ratio, but the one with the lowest overall cost of ownership.”

 

What do you buy first?

 

For many investors, going global has meant buying the US. Vaibhav Shah says the logic is easy to see. The US has been among the best-performing developed markets for a decade. It accounts for about 64 per cent of global market capitalisation and has delivered annualised returns of more than 14 per cent over the last 10 years.

 

Experts say beginners should not stop there. “Go global with the most neutral index possible, the All Country World Index, or ACWI. That way you are not hostage to any one country’s economic cycle,” Borate says. “The US has a vibrant and innovative economy. But it has a debt problem, and its market has a very heavy tilt towards tech and artificial intelligence (AI).”

 

Vaibhav Shah says the AI value chain, geopolitical entanglements and tariff policies are changing the picture, and investors are exploring beyond the US. “For investors approaching global markets, a broader approach is likely to be more resilient rather than a concentrated bet,” he says. The US would still be the largest allocation in a diversified portfolio because of its size.

 

Viram Shah says the choice should depend on what an investor already owns. Those heavily invested in Indian equities could begin with a diversified US ETF or a global fund. “The objective should be to complement domestic investments with exposures that are genuinely different, rather than simply adding more familiar international stocks,” he explains.

 

What to add, and what to avoid

 

Once the core is in place, investors can add other regions. “The US is already around 65 per cent of the world index, so adding more US does not make sense,” Borate says. Investors can add emerging markets as a basket or pick individual countries. “My overseas portfolio has country ETFs that track Brazil, Mexico, Vietnam, Indonesia and China.”

 

Viram Shah lists Europe and Hong Kong among markets worth a look. Europe offers industrial, pharmaceutical, luxury and consumer leaders such as ASML, SAP, Nestlé and LVMH, many of which earn revenue globally. Hong Kong gives access to China’s growth and companies such as Alibaba, Tencent, BYD and Xiaomi.

 

The caution is about chasing winners. Taiwan’s TAIEX is up 65.68 per cent so far in 2026 and South Korea’s Kospi 42.24 per cent, against 13.81 per cent for the S&P 500, as on October 14, all in local-currency terms. Both Asian markets rallied on AI-driven demand for semiconductors.

 

Vaibhav Shah says each is a small part of global equities, about 3.5 per cent for Taiwan and 2.5 per cent for South Korea, and both are dominated by a handful of companies. In South Korea, two chipmakers account for roughly half the index. “An investor who enters after a strong rally takes on considerable single-market and single-sector risk.”

 

Viram Shah agrees that these markets suit a measured allocation rather than serving as the base of a beginner’s portfolio.

 

The takeaway

 

The experts differ on the route but agree on one thing: diversify. “Global diversification is therefore not about predicting which country will outperform next, but about building a portfolio that is less dependent on the performance of any single market, sector or currency,” Viram Shah says.

 

Disclosure: Views and outlook in this report belong to the brokerages and analysts cited. They do not reflect the views of Business Standard. Readers are advised to exercise discretion.