According to Niranjan Avasthi, Senior Vice President at Edelweiss Mutual Fund, “If you want winning markets in your portfolio, you need to invest beyond India.” He points out that while India has performed well in recent years, the US and China have consistently delivered strong returns and dominate global market capitalisation.
One hidden advantage of global investing is currency depreciation. “The rupee has depreciated 3% to 4% annually against the dollar over the last 30 years,” Avasthi said. “The S&P 500 returned 12.75% in dollar terms over the past decade, but in rupee terms, it gave 16%.” That difference, he explains, is purely from currency movement—an added benefit for Indian investors holding dollar-denominated assets.
Nasser Salim, Managing Director of Flexi Capital, agrees. “Global funds need to be part of your portfolio,” he said, citing four reasons: geographic diversification, access to sectors absent in India, currency hedging, and market-cycle balance. He emphasises that international assets act as a natural hedge, especially for long-term goals like children’s overseas education.
Diversification also means exposure to sectors missing in Indian markets—like global technology giants, luxury brands, or healthcare innovators.
Both experts warn against trying to time the market. Instead, they advocate for a steady, strategic allocation to international funds—starting small, around 5% to 10%, and growing it based on your goals. Avasthi highlights that “even in India, it’s hard to get in and out of the market at the right time. Globally, it’s even harder.”
The US and China remain the two most important international markets. While the US continues to offer growth via large-cap tech companies, China provides niche opportunities in energy transition and electric mobility. “A staggered approach to US equity is prudent right now,” Salim said. For China, he sees long-term potential despite near-term uncertainties.
Investors must also choose between active and passive strategies. According to Salim, of the 66 international mutual fund schemes currently available, 57% are passive and 43% are active. Passive funds track indices like the S&P 500 or MSCI China, while active funds are managed by professionals and can tap into specific global themes.
However, Avasthi cautions against blindly opting for ETFs. Many Indian investors are unaware that ETFs can trade at a significant premium to their actual value. “Even if the market gives zero return and the premium drops, your return can be negative,” he said. In such cases, he suggests choosing actively managed funds of funds (FoFs) instead. “Go via SIPs, use simple active FoFs, and don’t worry about the rest.”
Ultimately, both Avasthi and Salim agree on a core-satellite approach: maintain a strong domestic core portfolio, but add global exposure as a satellite component. This, they say, is the best way for Indian investors to build wealth over the long term while managing risks effectively.
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