GOING GLOBAL

Diversification is a well-known principle in investment world. Investment across different asset classes help create large corpus by reducing portfolio risk. But it is not just limited to asset classes alone. Apart from asset diversification, geographical diversification is also an important aspect of modern investing. The good news is in the last couple of years, international investing has got a lot of traction. The statistics prove that.

- PRIYA KAPOOR

In 2021-22, the outward remittance under Liberalised Remittance Scheme for 'investment in equity and debt' by Indian citizens went up to $746.57 million from $195.45 million in 2014-15. Similarly, investment in property went up to $112.9 million from $45.54 million during the same period. "Diversification, both geographically and from a currency perspective does make sense from an asset allocation standpoint," says Lakshmi Iyer, CEO, Kotak Investment Advisors.

Agrees Pritam Patnaik, Head - Commodities, HNI & NRI Acquisitions, Axis Securities "Global investment helps to divide your risks between multiple markets (India and the US). Additionally, it provides exposure to various companies and industries currently missing in India, such as Artificial intelligence, CRISPR, etc."

But when it comes to investing abroad, the US markets march ahead. They are popular mainly on account of two things: One they have a large market size. In March 2022, the Indian stock market had a market cap of $3.21 trillion, while the market cap of the US stood at a whopping $47.32 trillion. Second is the liquidity: The US markets are much more liquid than the Indian markets. This means that it is easier to buy and sell stocks in the US market as there is always someone willing to trade.