A reader asks, “I am looking for equity funds that hold foreign stocks (overseas equity) but also hold 65% of Indian equity similar to Parag Parikh Flexi Cap Fund so that it will be taxed as an “equity fund”. Can you help?”
The advantage of holding such funds compared to a Nasdaq 100 or S&P 500 index fund is that the fund manager will handle the rebalancing between Indian and foreign stocks with no tax outgo on our side. The tax on redemption will also be lower since these Index funds or an international fund of funds will be taxed as a “non-equity” fund. For a since NFO investor account in Parag Parikh Flexicap, see Portfolio Audit 2021: How my goal-based investments fared this year.
The disadvantages are fund manager risk and popularity risk like, for instance, with Parag Parikh Flexicap. For investors with reasonable expectations who do not worry about “star ratings”, this is a reasonable risk to take since there are currently no passive options.
How to interpret this list: Funds holding overseas equity and 65% of Indian equity (as of Nov 31st 2021) are listed below. The numbers shown can vary considerably from month to month. The tax status of some funds can also vary from equity to “non-equity”.
Therfore the reader should be aware that the numbers below indicate that the fund “can hold overseas equity”. They should then consult individual scheme information documents to learn the range of permissible international equity.
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Some of these funds hold overseas mutual fund units. The weights below are the sum of overseas direct equity and overseas mutual fund units (when applicable).
List of Indian Equity Funds holding International Equity
The numbers are as of Nov 30 2021. None of the funds listed below are investment recommendations. We could identify a total of 38 such funds.
| Category | Fund | Overseas Equities% |
| Value | DSP Value Fund | 31.83 |
| Flexicap | Parag Parikh Flexi Cap Fund | 30.36 |
| Thematic Misc | Axis ESG Equity Fund | 27.03 |
| Technology Funds | Franklin India Technology Fund | 26.72 |
| Thematic Misc | Axis Special Situations Fund | 24.9 |
| Energy and power | DSP Natural Res & New Energy Fund | 23.73 |
| Large and Midcap | Axis Growth Opp Fund | 23.53 |
| Technology Funds | SBI Technology Opp Fund | 23.04 |
| MNC | ICICI Pru MNC Fund | 20.47 |
| Multi-asset | Nippon India Multi-Asset Fund | 19.78 |
| Thematic Misc | Kotak Pioneer Fund | 18.2 |
| Consumption | ICICI Pru FMCG Fund | 16.56 |
| Focused | SBI Focused Equity Fund | 15.13 |
| large Cap | Principal Large Cap Fund | 13.96 |
| MNC | SBI Magnum Global Fund | 13.28 |
| Aggressive hybrid | PGIM India Hybrid Equity Fund | 11.22 |
| Dividend Yield | Aditya Birla SL Dividend Yield Fund | 10.71 |
| Technology Funds | ICICI Pru Technology Fund | 10.38 |
| Pharma and Healthcare | DSP Healthcare Fund | 10.23 |
| Dividend Yield | Templeton India Equity Income Fund | 8.07 |
| Thematic Misc | ICICI Pru ESG Fund | 7.22 |
| Service Industry | ICICI Pru Exports & Services Fund | 6.49 |
| Thematic Misc | SBI Magnum Equity ESG Fund | 6.15 |
| Thematic Misc | ICICI Pru Business Cycle Fund | 5.92 |
| Value | ICICI Pru Value Discovery Fund | 5.43 |
| Thematic Misc | Tata Digital India Fund | 5.29 |
| Contra | SBI Contra Fund | 4.74 |
| Thematic Misc | Aditya Birla SL Digital India Fund | 4.63 |
| Thematic Misc | Aditya Birla SL Digital India Fund | 4.63 |
| Flexicap | SBI Flexicap Fund | 4.31 |
| Dividend Yield | ICICI Pru Dividend Yield Equity Fund | 3.82 |
| Consumption | SBI Consumption Opp Fund | 2.27 |
| Multi-asset | SBI Multi-Asset Allocation Fund | 1.82 |
| Balanced Advantage | SBI Balanced Advantage Fund | 1.38 |
| Large and Midcap | Franklin India Equity Advantage Fund | 1.34 |
| large Cap | ICICI Pru Bluechip Fund | 0.55 |
| Service Industry | Sundaram Services Fund | 0.37 |
We recommend that investors not buy any fund only for its overseas equity investments. They should ensure if the fund category is suitable for their need and further investigate a particular funds investment strategy before investing.
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