Rupee slumps, opportunities rise: A guide to international investing

With the rupee hitting 90 to a US dollar, safeguarding portfolios against currency risks is also becoming crucial

- Jash Kriplani

With the rupee slipping to record lows of ₹90 against the dollar, the need to hedge investment portfolios against currency depreciation is yet again in focus. This concern is especially relevant today, as Indians are increasingly spending in foreign currencies—on overseas travel, education, and other big-ticket expenses.

While the rupee has depreciated 5% against the dollar recently, it has historically weakened around 2.5-3% per year. Global diversification can benefit from rupee depreciation, as a weakening rupee boosts the value of returns earned abroad.

With mutual funds limited by overseas investment caps and international ETFs often trading at premiums on domestic exchanges, the usual avenues for global diversification remain constrained. Here's a look at some potential options.

Feeder funds

Among domestic mutual funds, there are some feeder funds that remain open for subscription. These are funds that invest in international funds. Hence, these are called fund of funds. “However, the underlying funds are actively managed and do not offer the same comfort as investing in a broad index, where there is no risk of a fund manager underperforming the benchmark,” said Vishal Dhawan, founder of Plan Ahead Wealth Advisors. “Earlier, investors could rely on funds tracking broad-based ETFs and indices, but those options are currently limited due to overseas investing restrictions.”

Note: open funds have limited overseas capacity, so watch out for updates if limits are exceeded.

Through foreign-broker route

Foreign broker platforms offer an alternative way to invest in US equities and ETFs. Client holdings—fractional or full—are kept in pooled omnibus accounts under global custodians. Sites like Vested and INDMoney provide access to ETFs listed on overseas exchanges, allowing investors to track diversified indices.