WORLD OF OPPORTUNITIES

GLOBAL MARKETS ARE OPENING UP TO INDIAN INVESTORS THROUGH GIFT CITY

- BY NACHIKET KELKAR

Over the last five to seven years, investing in the capital market has gained rapid traction. Many more Indians are buying stocks or investing in mutual funds in a big way. Unfortunately, much of that investment remains within India and companies in India. In a way, many investors are putting their eggs in one basket. While India is a high-growth market, exposure to just one market is a risk and wealth managers often stress on the need to diversify investments.

Another important thing is that by investing just in India, many are missing out on large and emerging global themes, like semiconductors or artificial intelligence or biotech.

The easiest way to diversify investments into global markets is via mutual funds that have schemes targeting those markets. For instance, funds targeting the US S&P500 or tech heavy Nasdaq or schemes focused on geographies like Europe or China.

However, the Reserve Bank of India has a cap of $7 billion on the total investments that Indian mutual funds can make in foreign markets. With most fund houses having hit the limit, this door to international investing is almost closed until the RBI raises the cap.

Retail investors could also invest directly and buy shares in the US. But, it is not as simple a process and costs can be high.

Asset management companies have now found an alternate route, which perhaps is also an advantage for Indian investors looking to invest abroad. Enter outbound funds from the GIFT (Gujarat International Finance Tec-City) International Financial Services Centre.