The third category is slightly different from the two routes we discussed earlier.

These are regular Indian mutual funds that invest primarily in Indian markets but keep a small portion of their portfolio in foreign stocks. They are not marketed as international funds, but if you look at their holdings, you will often find some exposure to global companies.

This is quite common in balanced funds, flexi-cap funds, and multi-asset funds.

For example, funds such as the ICICI Prudential Equity and Debt Fund or the HDFC Balanced Advantage Fund hold mostly Indian equities and debt, but may allocate a part of the portfolio to global companies. Typically, the international allocation falls somewhere between 10 and 30%, though the exact number can change over time.

Fund managers usually do this for two reasons.

The first reason is diversification. Some sectors and companies that dominate global markets simply do not exist in India. A fund manager may want exposure to large technology companies in the US or certain global consumer brands to make the portfolio more balanced.

The second reason is practical flexibility. Since these funds remain largely domestic in their investments, they are not affected in the same way by the SEBI overseas investment cap that we discussed earlier. Because of this, they are generally open for investment even when many dedicated international funds are temporarily closed.

From an investor’s perspective, the advantage is simplicity.

You do not need to make a separate decision about global investing. If the fund you already own allocates some money overseas, you automatically get a bit of global exposure as part of the overall portfolio.

At the same time, there is one limitation to keep in mind.

The international allocation is not fixed. It depends on the fund manager’s decisions and the fund’s strategy at that point in time. One year the allocation may be 20%, and another year it could move to 10% or rise to 30%. As an investor, you do not control exactly how much global exposure you end up holding.

The tax treatment depends on the fund’s overall allocation to Indian equities.

If the fund maintains at least 65% in Indian equities, it qualifies for equity taxation. That means long-term capital gains are taxed at 12.5% after 12 months, while short-term gains are taxed at 20%.

If the allocation to Indian equities falls below that level, the tax treatment changes.

In practice, these funds work best as a supplement to an India-focused portfolio. They can provide a small amount of global diversification without requiring a separate international investment.

However, if global investing is meant to be a deliberate and meaningful part of your portfolio, these funds may not provide enough control over how much international exposure you actually have.