If you are an NRI living in the UAE, you can invest in a host of mutual fund schemes in India as per your investment objectives. Mutual funds
are market-based investment instruments that can offer high, tax-optimized inflation-beating returns and are suitable if you have long-term financial goals. It is a good investment choice for diversifying your portfolio and earning optimal returns over time. Also, you can invest in them on both repatriation and non-repatriation basis.
Another added benefit of investing in mutual funds is that you get exposure to expert-managed portfolios and your fund units get handled by professional fund managers. So, in what types of mutual funds can you invest?
Equity fund – These funds invest in equity instruments with more than 65% of the fund containing stocks
(equity). The tax applicable to the sale of equity mutual funds depends on your period of holding and gets subjected to either short-term capital gains or long-term capital gains.
Debt funds – If you are risk-averse and want to avoid high-risk equity investments, debt funds are a suitable choice as these funds invest only in fixed income instruments. The tax applicable to the sale of debt funds again depends on your period of holding and gets taxed accordingly.
Hybrid funds – These funds distribute the investment corpus across different asset classes in a planned manner to mitigate risks and generate capital appreciation. If you want to create a balanced portfolio by dividing between equity and debt funds and minimize your risks, hybrid funds are a good choice. For short-term gains, hybrid funds invest in government bonds and debt instruments, and for long-term income generation, it invests in equity stock of companies.
You can invest in Indian mutual funds
through your NRE or NRO account without needing any special approval from SEBI (Securities Exchange Board of India) or the RBI.
NRE account – An NRE account
can get used for saving your foreign earnings in Indian currency. It allows you to repatriate your income earned abroad (UAE in this case) and helps you to carry out business, banking and investments in India.
NRO account – An NRO account
allows you to manage your income earned in India such as rental, dividend or interest income. The interest earned here can get repatriated without any limits, but there is a limit of up to USD 1 million in a financial year on the principal amount.
You can open any of these accounts and then complete your KYC requirements under the norms set by the SEBI (Securities & Exchange Board of India).
KYC – This is a procedure laid down by the SEBI for financial institutions and depositories. If you want to invest in mutual funds
in India, you have to become KYC compliant by fulfilling all the eligibility criteria laid by the KYC procedures.