If you are an Indian global investor and aware of the wealth erosion risks created by the US Estate Tax, you probably already know that UCITS ETFs are a safe way of maintaining access to the US market without exposing yourself to the Estate Tax risk.
This is our detailed guide on how you can find the right UCITS ETFs for global investment, including how you can find UCITS equivalents of US indices and ETFS.
Table of contents
- What are UCITS?
- Why are global investors choosing UCITS ETFs?
- How to find the right UCITS ETFs for global investment?
- Invest in UCITS ETFs with Paasa
- FAQs
What are UCITS?
UCITS (Undertakings for Collective Investment in Transferable Securities) are investment funds that comply with EU (European Union) regulations and therefore can be traded across the EU.
What are UCITS ETFs?
A UCITS ETF is an Exchange Traded Fund (ETF) that is domiciled in Europe and strictly adheres to these UCITS regulations.
While these funds are legally based in Europe (typically Ireland or Luxembourg), they are often used to invest in global assets, including US stocks like the S&P 500 or Nasdaq 100.
Are UCITS ETFs as liquid as US ETFs?
Yes. UCITS ETFs are highly liquid and function almost identically to their US counterparts.
Here is why you can buy and sell them instantly:
- Mandatory Liquidity: By EU law, all UCITS funds must be open-ended. This guarantees that you have the legal right to redeem your money at any time.
- Institutional Volume: Major funds managed by giants like BlackRock (iShares) or Vanguard trade billions of dollars daily on the London Stock Exchange (LSE).
- Instant Execution: Just like in the US, professional market makers operate continuously to ensure there is always a buyer or seller. This allows you to enter and exit positions instantly during market hours with tight spreads.
Why are global investors choosing UCITS ETFs?
Global investors are choosing UCITS ETFs primarily to protect themselves from the US Estate Tax while maintaining their exposure to the US market.
The US Estate Tax is a federal tax levied on the transfer of a deceased person's assets to their heirs.
For non-residents, this tax applies to the value of US-situs assets exceeding the $60,000 exemption limit.
Example
Suppose you are a software professional based in India and working at a US tech company like Microsoft. A part of your compensation package is in the form of RSUs, and you currently hold $200,000 worth of Microsoft stocks.
Assuming this is the only US-situs asset you hold right now, your total Estate Tax liability on your stocks (since they are US-situs assets) worth $200,000 will be $36,000 (17.9%).
In the event of your death, your family will have to pay this amount upfront before they can access your assets.
As UCITS ETFs are legally situated in the European Union, they are not subject to the US Estate Tax even when they hold US stocks such as Apple, Microsoft, or Google.
How to find the right UCITS ETFs for global investment?
You can use our UCITS Screener to discover and compare 2,940 UCITS-compliant investment instruments.
You can search and filter UCITS by the Asset Class, Dividend Type, Domicile, Asset Management Company (AMC), the Exchange they are listed on, and the Currency they are denominated in.
If you want to find UCITS equivalent of US indices like the S&P 500, you can simply search using the name of the US index and our UCITS screener will show you all the UCITS equivalents available in the market.
You can then scroll the table and see more information like price, annualized returns, 3-year change, 5-year change, etc.
Invest in UCITS ETFs with Paasa
Paasa is currently the only India-facing platform that offers access to all available UCITS with end-to-end handling of FEMA compliance, INR remittance tracking, and tax-ready reporting; removing the operational burden from the investor.
Paasa also offers you the best FX rates, ensuring that your returns are not eaten up by platform fees.
Use our UCITS Screener to discover and compare UCITS-compliant investment instruments.
More tools from Paasa
- Estate Tax Calculator: You can use Paasa’s Estate Tax calculator to instantly find out your total estate tax liability based on the value of your US assets.
- Brokerage Calculator: You can calculate your brokerage costs by Paasa’s Global Brokerage Calculator.
Disclaimer
This blog is for educational purposes only and should not be construed as tax, legal, or investment advice. RSU taxation, estate tax exposure, and cross-border investment rules are subject to change and may vary based on your personal circumstances.
Investing in global markets involves risks, including currency risk and market volatility. UCITS ETFs, RSUs, and other securities referenced here are used for illustration and do not constitute recommendations. Past performance is not indicative of future results.
