The added advantage the US listed stocks offer is that the companies address a much larger market globally than most of the Indian companies.
Stock market investors in India, to a large extent, have their funds exposed to a single economy. Every global economy has its own weaknesses and strengths and there are certain risks inherent to the economies. Also, not all economies tend to grow or show signs of fragility at the same time. While the jury is still out, whether the stock market reflects the true picture of the economy or not, having a pie in the non-domestic economy is a step towards diversification. With funds diversified across geographies, the probability of risk adjusted returns remains high in case of a financial mishap in any one economy.
And, the US economy presents a suitable opportunity for Indian investors to let their domestic portfolio get a foregin flavour from some of the biggest names in the corporate world. If you are investing and holding some top India stocks like CDSL, IEX, Reliance, Bajaj Finserv, TCS, HDFC Bank, among others, there’s always a good enough reason to buy the US blue chips such as Google, Amazon, Apple, Tesla and others. “The Fundamental principles for buying stocks remain the same globally. The added advantage the US listed stocks offer is that the companies address a much larger market globally than most of the Indian companies,” says Ashish Ranawade, Head of Products, Emkay Wealth Management.
Unique opportunities in US stock market
The US stock market is the fertile ground for some of the greatest corporations in the world. The companies that are leading the technological advancements and constantly innovating with ideas and operations are home to the US stock market. As history has shown, global shareholders have been suitably rewarded over the long by investing in some of these globala giants. “Many of these companies are technologically advanced and even operate in emerging fields like space, Artificial intelligence, Material science, environmental science, genetics, advanced pharmaceuticals etc.,” adds Ranawade.
On the back of a 20 Trillion dollars economy, the US remains the world’s largest economy and with NYSE, Dow jones, Nasdaq and Russell indices, some of the biggest global firms of China, Japan and other developed countries are listed on their stock exchanges.
Factors to watch while investing abroad
As is being currently seen, the global liquidity infused by the US Fed after March 2020, the stock market indices have conquered new heights and are trading at near all time high levels. Because of its strength, the US economy is expected to soon come back to its pre Covid levels, although certain key economic indicators will be keenly watched in the short term. “Global events like inflation, interest rates, Fed reserve policies etc. have to be considered when investing overseas. Growth rates across various geographies have to be tracked. Currency movements affect these companies and also the investor who is investing in these companies,” says Ranawade.
For a growing number of Indian investors, the US is fast becoming the first choice for global investing. From individual stocks to ETFs, the US stock market provides various opportunities for all- traders, beginners to a long term investor.