What are International Funds?
An international fund, in India, is a SEBI-regulated mutual fund scheme that invests in securities outside India. This lesson explains the two ways such a scheme holds overseas assets, how investors transact in rupees, and what works differently from a domestic scheme.
What it is
An international fund is an Indian mutual fund scheme, regulated by SEBI, whose portfolio is invested in securities outside India. It is not a foreign product: the investor holds units of an Indian scheme in an ordinary mutual fund folio.
The scheme, not the investor, converts rupees and invests abroad. The investor therefore makes no remittance and needs no account outside India.
Two ways of holding overseas assets
Some schemes buy overseas shares directly. Others are fund-of-funds (FoFs): instead of buying individual securities, they invest in units of one or more overseas funds or exchange-traded funds (ETFs), for example ones that track an index such as the S&P 500 or the Nasdaq-100.
The FoF structure adds a layer. The investor bears the FoF's own expenses in addition to the expenses of the fund it invests in.
Rupees in, rupees out
Units are bought and redeemed in rupees, and the scheme publishes a rupee NAV. That NAV reflects two things at once: prices in the overseas market and the exchange rate used to turn them into rupees.
Transacting in rupees therefore does not remove currency risk. If the rupee strengthens, the rupee NAV is pulled down; if it weakens, the NAV is pushed up. Overseas market prices can move in either direction as well.
What works differently
Most mutual fund schemes disclose their NAV by 11 PM on the same day. Fund-of-funds, and schemes with 80% or more of their assets overseas, have until 10 AM on the next business day, so their NAV appears later. Redemption proceeds are paid within 3 working days for mutual fund schemes generally, and within 5 working days for schemes with 80% or more overseas.
SEBI caps how much mutual funds may invest overseas. When the limits are reached, a scheme can stop taking fresh subscriptions.
Rules at a glance
An ordinary folio, an overseas portfolio
Ritu, 29, a teacher in Bhopal, invests in an overseas fund-of-funds offered by an Indian mutual fund. She pays in rupees from her bank account in India into her mutual fund folio, exactly as she would for a domestic scheme. She makes no remittance abroad.
She notices two differences. The NAV for Monday is not there on Monday night; it is disclosed by 10 AM on Tuesday, the next business day. And the scheme's expense ratio is not her whole cost, because the overseas fund it invests in has expenses of its own. Later she may also find the scheme closed to fresh subscriptions if SEBI's overseas limits have been reached.
Key points
- An international fund is a SEBI-regulated mutual fund scheme that invests in securities outside India.
- It may hold overseas securities directly or, as a fund-of-funds, invest in units of overseas funds or ETFs.
- Investors buy and redeem in rupees through a folio in India; the rupee NAV reflects both overseas prices and the exchange rate.
- NAV of fund-of-funds and of schemes with 80% or more overseas is disclosed by 10 AM on the next business day.
- Such schemes carry market risk and currency risk in both directions, and can stop fresh subscriptions when SEBI's overseas limits are reached.
Common misunderstandings
- An international fund is not a foreign product bought abroad: it is an Indian mutual fund scheme regulated by SEBI.
- Paying in rupees does not remove currency risk: the rupee NAV moves with the exchange rate as well as with overseas prices.
- A fund-of-funds' expense ratio is not the full cost: the underlying fund's expenses are borne in addition.
- A later NAV is not a delay by the fund house: these schemes are given until 10 AM on the next business day.
Questions people ask
Is an index such as the S&P 500 itself a fund?
No. An index is a basket used to measure a market. An overseas fund or ETF may track it, and an Indian fund-of-funds may invest in that fund.
Does the investor need to send money abroad?
No. Units are bought in rupees through a folio in India; the scheme itself converts the money and invests abroad.
Can the scheme refuse new money?
Yes. It can stop taking fresh subscriptions when SEBI's overseas investment limits are reached.
What this lesson relies on
- SEBI Master Circular for Mutual Funds, 20 March 2026 (NAV disclosure timings, redemption payout, overseas investment limits)
- SEBI (Mutual Funds) Regulations, 2026
This lesson was reviewed independently against these sources on 8 October 2026. Rules change: check the current regulation, scheme document or policy wording before relying on any figure. This is education, not advice.