Nifty 50 is down by about 6.29 percent while the S&P 500 is lower by over 19.87% over the last 12 months. But, market experts suggest not looking at short-term returns and the performance of schemes while investing. Further, diversification across assets and geographies is always a better approach for investors.

Both the Nifty 50 and S&P 500 indices can be a good starting point for new as well as old-timers who haven’t invested abroad. Taking exposure to the index is possible by buying units of exchange-traded funds (ETFs) that track the index itself. You end up holding stocks in the same proportion as the index by investing in an ETF or any other fund that tracks the index. The returns in an ETF will be largely in-line with the return generated by the index.

Nifty 50 index represents the top 50 companies by market capitalization in Indian markets ( Reliance, HDFC, SBI, Bajaj Finance, and others) while the S&P 500 companies represent the top US firms including Amazon (AMZN), Apple (AAPL), Netflix (NFLX), and Google (GOOGL), Tesla, Microsoft, Broadcom, Cisco Systems, Adobe, Texas Instruments, Berkshire Hathaway, Visa and many more.

To invest in Nifty 50 as an index, you may consider Nippon India ETF Nifty BeES which is an open-ended large-cap equity scheme. NIFTY BeES is a typical Equity Exchange Traded Fund (ETF) combining the flexibility of stock market investment and the simplicity of equity mutual funds. The underlying portfolio of Nifty BeES very closely replicates that of the Nifty 50 index.

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Nifty BeES can be bought/sold like a share through any NSE terminal at prices available on the screen. In order to buy NIFTY BeES, you need to have a Demat account where you hold stocks purchased on any stock exchange. The units of NIFTY BeES can be bought at the prevailing market price anytime during trading hours on the stock exchange.

The SPDR S&P 500 ETF Trust (SPY), also referred to as the SPY ETF, is the ETF to use when investing in S&P 500 companies. You can gain exposure to some of the top US stocks across eleven key industries by purchasing SPY ETF. You can purchase SPY ETF using a brokerage account registered in the US, much like you would when purchasing equities shares.

Also Read: Why did US stock market rally after hot inflation numbers?

With the Fed hiking rates by 300 basis posits ( from near zero in January) in 2022 so far, the Fed Fund Rate is expected to reach around 4.5% in 2023 or may even cross over. The US inflation is at a 40-year high and hovering around 8% while the Fed is trying to pull it down to under 2%. In doing so, Fed risks pushing the economy into a recession as the economic activity including demand has to be suppressed.

As interest rate rise, the US dollar strengthens against other currencies reflecting in a stronger dollar index and reaching new highs in 2022. Rising yields due to rate hikes, a stronger dollar, and a weakening of the economy pose a threat to the global recession.

As the danger of recession looms over global economies, it is better to hold a diversified portfolio rather than restrict investments in only one economy. The US stock market gives access to investors to own some of the best-known, well-established multinational companies that are spearheading the next wave of innovation and customer-led businesses.