What Are Global Funds (UCITS)? A Beginner’s Guide to International Investing

Currently, India contributes to less than 4% of the equity market capitalisation in the world. Conversely, over 95% of the listed firms, industries and investment options are outside India.

Most of the biggest companies that influence the world’s consumption, technology, healthcare and innovation are not located in a single country, but rather are scattered across multiple locations.

Nevertheless, the majority of Indian investors’ portfolios are still more than 90% invested domestically. This poses a concentration risk not due to lack of growth in India, but because the world economy is not stagnant and cyclical. In the past ten years, whereas Indian equities have been doing great, there are a number of international markets as well as themes that have yielded good returns over various seasons. Meanwhile, the Indian rupee has been steadily weakening against the major world currencies, which affects the long-term purchasing power of savings saved exclusively in INR.

International capital is meant to correct this imbalance. Rather than selecting single foreign stocks or having to operate in more than one market, investors are now able to gain diversified global exposure in only one fund. These funds invest globally across industries and asset classes and are a simpler means of international expansion.

UCITS, or as we call them, Global Funds, have a globally recognised standard of international regulation that is centred on diversification, transparency, and protection of investors. Global Funds also provide an easy and convenient means of achieving more balanced portfolios for Indian investors planning to begin investing globally by way of funds.

What Does UCITS Mean and Why Does It Matter?

UCITS stands for Undertakings for Collective Investment in Transferable Securities. While the name sounds technical, the idea behind UCITS is simple. It is a globally accepted regulatory framework that defines how investment funds should be structured, managed, and monitored.

UCITS was created in Europe, but today UCITS funds are used by investors across 70+ countries. In fact, a large share of cross-border mutual fund investments globally happen through UCITS structures. The reason is consistency. A UCITS fund follows the same core rules regardless of where the investor lives.

So why does this matter for an Indian investor?

First, diversification rules are strict. UCITS funds cannot take excessive exposure to a single company or issuer. Typically, no single stock can exceed 10% of the fund’s assets, and large exposures are capped across the portfolio. This reduces concentration risk and ensures that a single stock or event cannot dominate outcomes.

Second, liquidity and transparency are built in. UCITS funds are required to publish regular disclosures, portfolio details, and net asset values. Most UCITS funds offer daily liquidity, meaning investors can enter or exit without long lock-ins. For someone investing internationally, this transparency matters more than brand names or past returns.

Third, risk management standards are defined upfront. UCITS regulations require clear limits on leverage, derivatives usage, and counterparty exposure. Funds must also segregate investor assets from the fund manager’s balance sheet. This reduces operational and structural risks, especially when investing across borders.

Fourth, UCITS funds are designed for retail investors, not institutions alone. The framework assumes that the end investor may not have deep technical knowledge. As a result, disclosures, risk labeling, and fund objectives are standardised and easier to understand compared to many offshore investment products.

For Indian investors, UCITS funds offer a middle ground. You get access to global markets and professional fund management, but within a structure that prioritises diversification, transparency, and investor protection. You are not taking country-specific or manager-specific regulatory risk blindly.

In simple terms, UCITS does not guarantee returns. What it does is reduce structural risk. When you are investing outside your home country, that distinction matters.

How Are Global Funds Different from Indian Feeder Funds?

When we talk about Global Funds here, we are referring to UCITS-structured funds that invest directly in global markets. These funds are set up in international fund jurisdictions and hold global assets themselves.

Indian feeder funds are domestic mutual funds that invest indirectly. They collect money in India and invest it into an overseas fund, which then invests in global assets. This structural difference changes how investors experience access, cost, and flexibility.

Key Differences at a Glance

Aspect	Global Funds	Indian Feeder Funds
Investment structure	Direct investment into global assets	Indirect, via another overseas fund
Regulatory limits	Not subject to Indian MF overseas caps	Subject to SEBI overseas investment limits
Availability	Continuous access (within LRS limits)	Can pause inflows when limits are hit
Fund choices	Wide range of global and thematic funds	Limited set of available strategies
Cost structure	Single expense layer	Two layers of expenses
Portfolio transparency	Detailed global disclosures	Limited visibility of underlying holdings
Long-term scalability	Built for cross-border investing	Designed as an extension of domestic MFs

Key Benefits of Using Global Funds via Vested

The way you invest internationally can have long-term implications beyond returns, especially around taxation, reporting, and estate planning. This is where Global Funds accessed through Vested offer practical advantages.

1. Direct Global Exposure Without Domestic Constraints

When you invest in Global Funds through Vested, you invest directly into UCITS-structured funds. This means your money goes straight into globally diversified portfolios rather than through multiple intermediary layers.

Unlike Indian feeder funds, these investments are not dependent on domestic mutual fund overseas limits. As long as you remain within the individual LRS allowance, your access remains consistent.

2. A Clear Advantage on Estate Tax

This is one of the most under-discussed benefits of investing through global funds.

If an Indian investor holds US-listed stocks or US-domiciled ETFs directly, US estate tax can apply in the event of death. The threshold is low. Holdings above USD 60,000 can attract US estate tax rates of up to 40%, depending on value and structure.

Most investors are unaware of this risk because it does not show up in annual returns. It only becomes visible during estate settlement, when it is already too late to restructure.

Global Funds offered through Vested are structured in a way that avoids US estate tax exposure. Since you are investing in internationally domiciled UCITS funds rather than holding US securities directly, these assets do not fall under US estate tax rules. For long-term investors and families thinking about wealth transfer, this structural protection is significant.

In simple terms, the difference is not about performance. It is about what happens to your assets when you are not around.

3. Lower Structural and Regulatory Risk

UCITS funds follow a globally accepted regulatory framework that prioritises:

• Diversification limits
• Daily liquidity
• Clear disclosures
• Segregation of investor assets

This reduces structural risk when investing across borders, especially compared to complex offshore vehicles or unregulated products.

4. Low Minimums, High Flexibility

Global Funds on Vested can be accessed with investments starting from USD 10. There are no lock-ins, and funds can be redeemed based on investor needs.

This makes global investing accessible not just to high-net-worth investors, but also to first-time global investors building exposure gradually.

5. Simplified Tax Reporting for Indian Investors

International investing comes with additional reporting requirements in India. Vested provides consolidated transaction statements and tax reports, helping investors comply with Indian tax disclosures without manual tracking across platforms.

Taxation of Global Funds in India

Global Funds are not taxed like Indian equity mutual funds. Their taxation depends on holding period.

Capital Gains Tax

Holding Period	Tax Treatment
Less than 24 months	Taxed at income tax slab rate
24 months or more	12.5% long-term capital gains tax (plus surcharge and cess)

Dividend Tax

Type	Tax Treatment
Dividends received	Taxed at income tax slab rate

Other Tax Considerations

Aspect	Treatment
Currency impact	Gains calculated in INR terms
Disclosure	Reported under foreign assets schedule
US estate tax	Not applicable for Global Funds

How to Invest in Global Funds from India

Indian residents can invest in Global Funds via Vested under the RBI’s Liberalised Remittance Scheme (LRS), which allows individuals to invest up to USD 250,000 per financial year in overseas assets.

A Simple Investment Flow

1. Open an international investing account with Vested – Complete basic KYC and regulatory checks. 
2. Fund your account under LRS – Transfer money from your Indian bank account. Vested facilitates the remittance and reporting. 
3. Choose a global fund – Select from global equity, global balanced, or thematic funds based on your goals and risk profile. 
4. Invest and monitor – Start with a lumpsum or gradual allocation. Most global funds offer daily liquidity and transparent reporting.

This approach allows Indian investors to build international exposure in a structured and compliant manner.

Who Should Invest in Global Funds and Suggested Allocation Ranges

Global Funds are not only for experienced investors. They are relevant for anyone building long-term wealth.

• Investors with India-heavy portfolios: If over 80–90% of your investments are in India, global funds can help reduce geographic concentration risk. 
• Long-term investors: Global Funds work best when held for longer periods, allowing diversification and currency exposure to play out. 
• Professionals with global lifestyle goals: Investors planning international education, travel, or retirement expenses benefit from partial foreign currency exposure. 
• Investors seeking portfolio stability: Global diversification can help smooth returns across economic cycles.

Investor Profile	Suggested Global Allocation
Conservative	5 to 10%
Balanced	10 to 20%
Growth-oriented	20 to 30%

These ranges are not recommendations, but guidelines. Actual allocation depends on risk tolerance, income stability, and existing exposure.

Global Funds are not meant to replace Indian investments. They are meant to complement them, creating a more resilient, globally balanced portfolio.

Making Global Investing a Practical Part of Your Portfolio

India will continue to be an important growth market. But it represents only a small part of the global opportunity set. Global Funds help investors participate in growth and innovation across countries while reducing reliance on a single economy or currency.

UCITS or Global Funds bring this exposure within a regulated, transparent, and investor-friendly framework. When accessed through a platform like Vested, global investing becomes simpler, more accessible, and structurally efficient, including advantages around taxation, reporting, and estate planning.

Used thoughtfully and in the right proportion, global funds can play a steady, stabilising role in long-term wealth creation.