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How you can invest in US markets through mutual funds


As Indian and global markets are trading at higher valuations, investors are confused about whether it is the right time to seek exposure in foreign funds. According to market experts, investing in global markets like the US through Exchange Traded Funds (ETFs) and Fund of Funds (FoF) can help you diversify and create sector-agnostic portfolios to garner stable returns.

“The US is at the forefront of all changes globally in terms of technology, research and innovation. The reason for any investor to go out and invest in the US markets is an absolute must-do,” feels Mohit Gang, Co-Founder & CEO, Moneyfront.

Recently, several asset management companies in India have launched mutual funds which provide exposure to global markets. In an
exclusive session
hosted by Economictimes.com, Gang emphasised the benefits of global investing.

“The benefits of investing globally could be manifold for investors. Robust performance of the US markets and impact of currency depreciation are some of them. The Indian Rupee has been depreciating against the US dollar for the last 20 years, which additionally adds to an investor’s return,” says Gang.

If INR appreciates against the currency in which investments are made then the value of foreign assets declines as a result of which the fund investing in such foreign assets will also bear the impact of it.

Besides exposure to international markets, ETFs and Fund of Funds offer diversification benefits resulting in portfolio stability. “ETFs track an underlying asset so they provide a method-driven and transparent approach to take exposure in foreign markets. Investors can take a tech-based or sector-agnostic exposure through different ETF products in a cost-effective manner,” says Siddharth Srivastava, Head-ETF Products, Mirae Asset Investment Managers (India) Pvt. Ltd.

FoFs offer the convenience of investing through Systematic Investment Plan (SIP) and Systematic Transfer Plans (STPs) like any regular mutual fund, without the need for a demat and broking account.

“Investors can take a focused exposure in a theme, sector or market in general through ETFs. Also, recently, passive funds have outperformed active funds in India, a trend seen in the US. ETFs and FoFs can be considered as two good ways to take exposure in foreign markets like the US. Investors can take exposure in ETFs through FoFs, without having a demat account,” adds Srivastava.

On the ideal allocation for investment, Mohit Gang feels, “A 5-20 percent allocation at all times, in any kind of portfolio, can be good for hedging purposes also besides benefitting in the long term.”

The experts discussed how the Indian investment landscape has evolved in terms of global investing in a webinar titled, “
Avenues to Invest in US Markets
,” conducted by Economictimes.com in association with Mirae Asset Mutual Funds.

The session elaborated on different investment strategies to choose the right global fund. The expert panel also deliberated on how Indian investors can invest in US mega cap companies.
Click here to watch the full session.
.



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