Parag Parikh Financial Advisory Services, PPFAS, has announced the details of the two new passive overseas equity funds for Indian retail investors. The names of the two funds are ‘Parag Parikh IFSC S&P 500 Fund of Fund’ and ‘Parag Parikh IFSC Nasdaq 100 Fund of Fund.
Both these are Funds of Funds as they will invest money raised from Indian investors into existing ETFs tracking the S&P 500 Index and NASDAQ-100 Index, respectively.
The S&P 500 Index comprises 500 leading publicly traded U.S. companies, representing the core of the American equity market, while the NASDAQ-100 Index tracks the performance of the 100 largest non-financial companies listed on the NASDAQ Stock Exchange.
For those looking to invest in US stocks without opening a brokerage account, these schemes can come in handy.
How Will They Work
Parag Parikh IFSC S&P 500 Fund of Fund will directly invest all money collected from Indian investors into overseas ETFs that track S&P 500 and NASDAQ-100. The funds have a mandate to invest 90 – 100% in ETFs linked to the indices and 0 – 10 in debt securities.
Fund Features
The scheme will have both Regular and Direct plan options with a minimum initial investment of US $5,000. Total Expense Ratio (TER) of the Regular option is 0.60%, while for the Direct option it is 0.30%. The maximum TER, including Investee Funds, can go up to 0.70% and 0.40%, for regular and direct funds, respectively.
All investors, including Indian resident individuals, corporates, trusts, and partnership firms, are eligible to invest. There is no lock-in period and no exit load applicable in the two schemes.
If the investor’s holding period is less than 2 years, the redemption NAV will be long-term post-tax NAV, and if the investor’s holding period is less than 2 years, then short-term post-tax NAV will be applicable.
The two international FoFs will be offered by PPFAS Alternate Asset Managers IFSC Private Limited, which is a subsidiary of Parag Parikh Financial Advisory Services Limited (PPFAS). The fund house has not yet disclosed the date on which it would begin taking contributions.
According to the fund house, there will be no inheritance tax implications for Indian investors. Further, investors in these FoFs will not have to deal with the forex conversion and transaction costs, typically involved in the direct purchase of US stocks.