Indian Investors Consider Direct Stocks vs Mutual Funds in Investing in Asia by 2026

Key Takeaway:

1. As Indians become interested in investing in Asia in 2026, two ways through which they are doing so include direct stocks, according to RBI’s Liberalised Remittance Scheme.

2. Mutual funds approved by SEBI, such as the Franklin Asian Equity Fund, which has produced returns of 53.79% during the past year (INDmoney, June 2026).

3. The decision of many Indian AMCs to block new investments in foreign funds due to hitting the USD 7 billion limit imposed by SEBI prompted investors to consider investing directly as an option.

Does Investing in Asian Stocks through Direct Approach Make Sense for Indians in 2026?

Today, Indian investors have two options for making money from investments in the Asian Market in 2026. The first option is direct investing through the Liberalised Remittance Scheme, which is under RBI regulation. 

Second option is involves buying units of SEBI-regulated mutual funds in Rupees. These two methods became more evident in early 2026, after some asset management companies halted the receipt of fresh capital in international mutual funds owing to SEBI’s $7 billion foreign MFs limit getting exhausted.

Wrong decision-making might prove costly for the investors. According to the LRS provisions, the TCS on any amount exceeding ₹10 lakh stands at 20%. The capital is restricted until the investor files his ITR and claims the TCS credit, per the report by Finnovate (August 2025). The investors who invest directly in Asian markets have other duties as well.

How Will Each of the Above Routes Work for Indian Retail Investor?

The mutual fund route is easier and cheaper for Indian retail investors compared to others. There will be no need to convert money from INR to USD, no need to fill an LRS application form, and no TCS deduction. Franklin Asian Equity Fund (Direct Plan), which invests in Asian stocks except Japanese stocks, has assets under management of ₹521 crores as of May 2026, an expense ratio of 1.4%, and a 1-year CAGR return of 53.79%.

What Do The Experts Say? What Option Must You Choose?

As an investor sending funds below ₹10 lakh annually, you may consider the domestic international mutual fund structure as the better choice since you won’t have LRS remittance, Schedule FA, or TCS. In the opinion of Finnovate (August 2025), GIFT City structures come into play only when investors want to invest large amounts in dollars.

SEBI itself has mentioned in one of its consultations that the direct investment in Indian as well as foreign equities made by an Indian investor is relatively cheaper than the investment made via a foreign fund-of-funds scheme offered by Indian mutual funds. However, in the case of Asian markets, mutual funds are still considered better than equity investing.

Conclusion

Asian mutual funds through SIP can be used by Indian retail investors with smaller investments of ₹500, whereas those with an investment portfolio exceeding ₹10 lakh and having the capacity for compliance issues can adopt LRS direct stocks after studying its TCS and tax treaties.

FAQs

Would it even be worthwhile to invest in Indian equities in 2026?

The answer is yes, because the Indian economy keeps growing and earns money consistently for business firms, which have good economic systems.