Looking for low cost fund options in India

[gwldaddu]

OK, no AAP.

2. It appears that you believe that by leaving assets in USA you have tax advantages and that seems to be the reason you want to leave money in USA.

3. Besides #2, what other tangible reason do you have to leave assets in USA? Remember you can invest in India for long term also.

Desi,
I have been investing here in USA for more than 10 years now. I am a big fan of Index Investing (buy and hold conventional MFs indefinitely, not trading via ETFs)

Thinking about India, makes me wonder, if there is anything equivalent to Vanguard Funds in India?

In short, my question is, if I have money in Vanguard Total Stock Market Index Fund and Vanguard FTSE All World ex USA... where in India will I invest that money in?

Your inputs will be really appriciated.

[Desi]

Desi,
I have been investing here in USA for more than 10 years now. I am a big fan of Index Investing (buy and hold conventional MFs indefinitely, not trading via ETFs)

Thinking about India, makes me wonder, if there is anything equivalent to Vanguard Funds in India?

I am not sure how your query is related to the title of this thread. In any case, when you say equivalent to Vanguard, I assume you are asking for a low cost Mutual fund house (because that is what separates Vanguard from other MF houses) and a MF house that provides index funds.

In India, essentially every MF company provides Nifty and Sensex index funds. They also provide various sector funds but they are managed funds. Sector INDEX funds limited to just Indian companies are limited, but here is some information from NSE website http://www.nse-india.com/content/indices/ind_indexfunds.htm

As to low cost, I am not aware of a fund whose expenses are as low as Vanguard. Expenses are an important component but much more important is to have the right fund (asset class).

In short, my question is, if I have money in Vanguard Total Stock Market Index Fund and Vanguard FTSE All World ex USA... where in India will I invest that money in?

If you want to invest in Vanguard funds, Vanguard does not sell on Indian exchanges.
If you want to invest in Total stock market of USA and Total World (except USA), I am not aware of such funds offered by Indian MF companies.
I am aware however that there are some funds that offer international exposure like Principal Global fund, but I have not explored this in detail.

[gwldaddu]

I am not sure how your query is related to the title of this thread. In any case, when you say equivalent to Vanguard, I assume you are asking for a low cost Mutual fund house (because that is what separates Vanguard from other MF houses) and a MF house that provides index funds.

In India, essentially every MF company provides Nifty and Sensex index funds. They also provide various sector funds but they are managed funds. Sector INDEX funds limited to just Indian companies are limited, but here is some information from NSE website http://www.nse-india.com/content/indices/ind_indexfunds.htm

As to low cost, I am not aware of a fund whose expenses are as low as Vanguard. Expenses are an important component but much more important is to have the right fund (asset class).

If you want to invest in Vanguard funds, Vanguard does not sell on Indian exchanges.
If you want to invest in Total stock market of USA and Total World (except USA), I am not aware of such funds offered by Indian MF companies.
I am aware however that there are some funds that offer international exposure like Principal Global fund, but I have not explored this in detail.

Desi,

I hijacked the thread and I admit that my questions were in no way related to the original questions.

However, since I am moving to India next year and will be in same boat as OP, I started discussion here.

Basically, i was referring to your below point and saying that if my Asset Allocation involves investing in "Total Stock Market of USA" and "FTSE All World (ex USA)".. then I will have to continue with Vanguard even after I return to India. Because No Indian company would give me those two funds.

3. Besides #2, what other tangible reason do you have to leave assets in USA? Remember you can invest in India for long term also.[/Quote]

I understand that TSM (USA) would not be an option with Indian MF companies. However, do you know if any of them provides explosure to FTSE All World (ex USA)?

So, will you agree that I should leave the money here if I do not want to alter my AA. Right?

I have not actually spend much time on money forums here and I am sure I will get my answer once I dig into these forums. I tried to be lazy and ask a direct question to a guru here :-)

Please advice if you can..

[Desi]

Desi,

I hijacked the thread and I admit that my questions were in no way related to the original questions.

However, since I am moving to India next year and will be in same boat as OP, I started discussion here.

Basically, i was referring to your below point and saying that if my Asset Allocation involves investing in "Total Stock Market of USA" and "FTSE All World (ex USA)".. then I will have to continue with Vanguard even after I return to India. Because No Indian company would give me those two funds.

The following makes no recommendation, it is still at the querying stage:
[QUOTE]
Originally Posted by Desi
3. Besides #2, what other tangible reason do you have to leave assets in USA? Remember you can invest in India for long term also.


Yes, if you want to invest in TSM for USA and all world, then those funds are fine.

I understand that TSM (USA) would not be an option with Indian MF companies. However, do you know if any of them provides explosure to FTSE All World (ex USA)?

No, I do not know if such fund exists in India. RRK may be able to provide you with a more meaningful answer than me as I do not follow Indian funds that closely.

So, will you agree that I should leave the money here if I do not want to alter my AA. Right?

Sure, if you do not want to alter your AA, there is no need to alter any investment.

I have not actually spend much time on money forums here and I am sure I will get my answer once I dig into these forums. I tried to be lazy and ask a direct question to a guru here :-)

I looked over my back, did not see any guru there, so feel free to point me in his direction too.

Please advice if you can..

If you want to invest in TSM and all world and you are already invested and know that that is what you want to do and you are investing per your AAP, then I don't see how I can be of any help. As already indicated that I am not aware of such a fund in India.

[gwldaddu]

I looked over my back, did not see any guru there, so feel free to point me in his direction too.

Someone knowing more than me and taking an initiative to help others, is a guru under my definition. You qualify..

Though I agree that RRK being more active in Indian market may be right source

What advice are you seeking? If you want to invest in TSM and all world and you are already invested and know that that is what you want to do - I do not know what to advice on.

Basically, the advice I was looking for is this:- I am happy with my AA and have followed it since the time I started investing (dont remember exact dates.. but has to be either 2000 or 2001).

However, this AA was designed with the basic assumption that I will live in USA and retire here. Now, with R2I in question, equations change. Two opposing points make my decision difficult.

1. I am happy with AA and specifically very happy with Vanguard. Since, I know USA market and USA MF companies more than Indian, the trust and confidence factor favors investment in USA.

2. Since I will retire in India, keeping money in USA adds another risk factor of currency fluctuations. So transferring money to India seems safer by this point..

What to R2Iers do when they move? Do they take their 401k and IRA money to India or do they leave it here. Why?

[RRK]

1. For r2iers, I dont see a reason to look for Indian funds that would invest in TSM or World Market. If one need exposure to these asset classes, leaving money in USA with vangaurd funds or ETFs are the best option.

2. India residents who never been NRI, might suffer from lack of such asset classes in India. Recently Benchmark funds has introduced an ETF in INR based on Hang Seng Index. Fund houses may lauch global funds very soon.

[g_senthil_mm]

Options for overseas investing from India are available in the below link. Please note that "NONE" of these are low cost funds.

Also some of these funds are feeder funds and the actual expenses charged may be more than what displayed in VROL.

http://new.valueresearchonline.com/funds/h2_typecomp.asp?type=1&objective=32

[Desi]

What to R2Iers do when they move? Do they take their 401k and IRA money to India or do they leave it here. Why?

A proper AAP for a person living in India should include a certain percentage of investments in Indian markets as well as fixed income. This means that the investments in US and international markets for a small portion of their assets. This investment in US and International markets has to be tempered with estate taxation issues based on their holding USC or not.

The 401K and IRA are just investment vehicles, the same investment can also be made in USA outside of an IRA. The 401K /IRA retention or dissolution decision depends upon tax issues of the individual. If the person is going to be in a low US tax bracket while in India, I invariably advice to start withdrawing from 401K/IRA and have a defined exit strategy from this investment vehicle. If the rest of the financial plan suggests investments in US markets then the money withdrawn from IRA/401K can be moved to a brokerage account in USA. I always advice to rollover 401K monies to IRA.

[Old-Spice2]

>>>A proper AAP for a person living in India should include a certain percentage of investments in Indian markets as well as fixed income. This means that the investments in US and international markets for a small portion of their assets. This investment in US and International markets has to be tempered with estate taxation issues based on their holding USC or not.

What if you move all of your assets to India before kicking the bucket? Will there be any US estate tax implications for funds held outside?

Problem of moving all the money to India is you lose the opportunity to invest overseas. All of your money will be invested in Indian market. Due to PFIC, MF choices are limited. Buying 50 stocks to mimic Nifty Index is a headache. Only option is to buy Nifty BeES ETF.

[Desi]

What if you move all of your assets to India before kicking the bucket? Will there be any US estate tax implications for funds held outside?

For a US citizen, the answer is yes. For a green card holder domiciled outside USA and also for an NRA, the assets held outside USA are not subject to US estate tax implications.

Problem of moving all the money to India is you lose the opportunity to invest overseas. All of your money will be invested in Indian market. Due to PFIC, MF choices are limited. Buying 50 stocks to mimic Nifty Index is a headache. Only option is to buy Nifty BeES ETF.

A USC does not need to move assets. A GC holder and an NRA should be wary of the estate tax implications and limitations. A GC holder who decides to move assets to India so as not to be bothered by US estate tax issues, needs to be wary of PFIC issues. A GC holder who plans to relinquish his GC can buy MFs with growth option and sell them after relinquishing GC.