Investing abroad in blue chip funds is the latest arriving avenues discovered in established Indian portfolios which are diversifying into blue chips funds like Apple, Microsoft, Citi Group, Coca Cola. These companies over the past 5 months have increased at a considerable stock price of 30%, whereas Indian blue chips like Maruti, HDFC Bank in the past 5 months have appreciated around 18%. Due to the appreciating value of stocks and keeping a close look on the P/E multiples of stocks, wealth advisors in India have suggested that it is time for Indian investors to look beyond Indian markets.
As far as the recent outrun of dollar is concerned where the exchange rate is rallying at Rs 54/- ( as on 16/05/2012 ) , trading in the US markets could be a lot more of handling the currency fluctuations. To overcome this high volatility of Rupee-Dollar, Indian investors are investing in stocks which have capabilities to yield 20-30% profits annually. Since the domestic markets have subsequently not given the best of returns as back since 2008 where the BSE noticed a hard rally with domestic & foreign investors. In that year the foreign investors pumped in nearly $17.5 billion in India, whereas the domestic investors invested Rs 26,200 crores.
According to the Reserve Bank Of India, Indian investors can rope in Rs 1,00,00,000 for investment in other developed emerging economies on an annual basis. The procedure for investing abroad is a very simplified process by opening a demat account with brokers in the city like Kotak Securities & icicidirect.com, which enable foreign trade with completing the “Know You Client” process which is to ensure the safety of the demat account holder in accordance with the broker records. The brokerage charges are generally lower for funds which are domiciled overseas whereas Indian brokerage charges are roughly a percentage of the entire transaction.
There are many funding opportunities available for investments abroad, Direct Investments in blue-chip stocks remains to be the popular one. The other avenues are Mutual funds, Index futures like Nasdaq100 & Feeder funds launched by Indian Mutual funds. Another major area for investments are the Exchange traded funds (ETFs) which is particularly when am investor feels bullish particularly on one country’s growth. For an exposure of ETFs within India itself is very much viable as there are few which are on Indian stock exchanges track foreign indices such as Nasdaq100 and Hang Seng.
Few essentials to be kept in mind while investing on the global platform is that the tax treatment on every investment product is different. Therefore, to ensure payment of taxes along with investing in the fund requires appropriate tracking of the various change in policies which might take place abroad. Also it is very important to manage currency values depending on the financial market one is investing in. Though the investment value for investing outside India is very high, but over the coming years the investing horizons have broadened. Recent initiatives like the BRICSMART have also noticed an increase in demand of Indian Investors dawning the foreign markets.