Seven years after the government first permitted Indians to invest abroad, it really is about time for Indian investors to get serious about global geographical diversification. The experience of the last few years has shown that there is no guarantee that any assumptions about global stock market performance can be true. For long years, investors were hardly interested because the Indian markets did either a lot better or at least no worse than any other. This is no longer true. At a negative 34 per cent, 2011 saw Indian equities turn up the worst performance among major world markets in dollar terms, which is what matters in a global comparison.
There are now enough mutual funds available in India to diversify your investments around the world in any way that you want. Curiously, until now the roster of international funds was full of speciality funds that were focused either on other emerging markets or on some speciality theme or a sector, or a combination of the two. Funds focused on the mainstream companies in the mainstream markets of the world have been available in smaller numbers than they should be. This is now beginning to change. Even the US markets, which have been most neglected, now have two dedicated mutual funds in India. Both are solidly mainstream. Motilal Oswal’s NASDAQ Top 100 ETF has top holdings of Apple, Microsoft, Google, Oracle and Intel. Franklin Templeton’s new US Opportunities fund will be feeding a US fund whose top holdings are similar names.
Ideally, this move to diversify globally should be made by mainstream Indian equity funds, most of which should add a balanced amount of global equities to their portfolios. However, one way or another, Indian equity investors should start looking outwards as a routine part of their investment strategy.
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