Indian funds down. Go abroad?

Since equity-based funds in India have given negative returns, why should we not consider foreign funds? - Narendra

Ashutosh Gupta: That is a strong way to put it. Equity funds giving negative returns can be true at a particular point in time, but equity has to be judged over the long term. Every market goes through spells of negative returns. That is the nature of equity. It does not move in a straight line.

The real question is how markets have done over the long run, and Indian markets have done well. Given our macroeconomic picture and what we expect from the economy, you can reasonably expect Indian equity to do well too. A stock market, after all, mirrors how the economy is doing. If you expect India to grow over the next five to ten years, then you should be an equity investor. As people earn and spend more and companies make higher profits, Indian equity is a sound place to be.

None of that takes away from the case for spreading some money abroad. While you stay invested here, it makes sense to hold some allocation outside India for diversification. Being invested in India does not stop you from putting a part of your  money overseas as well.

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