Smart investing is all about finding the right balance between risks and returns. By diversifying your portfolio with the appropriate mix of stable assets and riskier, more profitable investment instruments, you can ensure that your progress in your financial journey is on track. Now, many investors may be well-versed with the ploys of maintaining diversification by investing in a variety of assets. However, diversification can also be geographical and that is something that the retail investor community is slowly recognizing. Through global investing you can dabble in various investment avenues in various markets across the globe.

Global investing allows you to take advantage of a plethora of investment types, political and economic environments, government policies and currencies. Thus, your portfolio’s exposure to domestic turbulence is reduced and the resulting diversity can enhance your profits and shield your investments from the concentrated risks that may arise out of domestic issues.

Benefits of global investing

It is impossible for the market and economy of one country or region to be in the pink of health all the time. By global investing, you can amp up your diversification game and also control your risks because your investments will be spread across various markets and sectors. Thus, your portfolio will have exposure to the best companies and industries which you wouldn’t have otherwise if you had limited your investments to the domestic market. In an era when Indians are increasingly consuming products and services of global brands that are not listed here, global investing is a great way to participate in the growth story of these brands, some of which enjoy an impressive market share in India.

Also, economies of different countries rarely go through similar growth phases at the same time; this may be unrelated but, studies show that correlation reduces in the long term. Thus, by investing globally across different markets, you will be in a better position if there is excess volatility in the domestic market. This also ensures that your overall returns are not hampered even if the Indian economy is going through a wobbly phase while other economies are faring better.

What’s more you can also reap benefits from the exchange rate fluctuation if you invest globally and this can help in capital appreciation. Foreign investments can provide a potent buffer against rupee depreciation. When the rupee slides against the currency of an international market where you have invested, you can get more rupees per unit of the currency invested and the net asset value (NAV) rises. Similarly, when the rupee ascends, the NAV decreases. For instance, an investment of $2,000 in a stock when 1 USD = Rs 70 would mean your cost of investment in the native currency is Rs 1,40,000. In a scenario when the exchange rate increases to Rs 75, your investment will now be valued at Rs 1,50,000. Thus, you would have made a profit of Rs 10,000 from merely currency fluctuations.

Investing globally is slowly becoming a more popular practice in India with major AMCs facilitating global exposure for retail investors through various products. If you are intrigued by the arena of global investing, you can start by allocating a small percentage of your portfolio to global stocks or mutual funds and with time, as you develop a better understanding of the nuances of global investing, you can increase your exposure.

Disclaimer: An Investor Education Initiative by Mirae Asset Mutual Fund

For information on one-time KYC (Know Your Customer) process, Registered Mutual Funds and procedure to lodge a complaint, refer to the knowledge center section available on the website of Mirae Asset Mutual Fund

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.


IE Disclaimer

An investor education initiative by Mirae Asset Mutual Fund.

For information KYC process, Registered Mutual Funds and the procedure to lodge a complaint, refer knowledge centre section available on the website of Mirae Asset Mutal Fund.

Mutual fund investments are subject to market risks, read all scheme related documents carefully.