Investing in global funds make better sense

When it comes to the US markets, there are certain areas they are doing well. “Every market has different sectors or companies leading. For example, in the US, it’s all about technology stocks viz., FAANG (Facebook, Amazon, Apple, Netflix, and Google) that has led the markets.”opnied these experts.

“The US market should be the first market for diversification due to two reasons. It’s the world’s largest economy, and many of its companies have a wide global presence. Not only are you playing the biggest economy, but also its international expansion over the next decade.” say some experts.

As international funds invest in foreign currency-denominated stocks, the rupee depreciation has a positive impact on the return of the overall scheme. Says Pranjal Kamra, chief executive officer (CEO), Finology, “So, the Indian investor with exposure to such schemes will earn profits in the short run.”

Another reason why investing in international funds makes sense is diversification. "Investors need to allocate 10-15 per cent of their portfolios in international investment over the medium term to reap rewards of diversification. The US markets have historically had low correlation with the Indian markets, while offering the same return profile — thus, leading to higher portfolio stability"say experts.