Domestic Investment Options Offer Global Exposure to Investors

US Equities Outperform Indian Markets, but Global Exposure is Closer than You Think

The past year has seen a significant rally in global indices, with the US equities delivering up to 50 percent returns. This outperformance has been notable, surpassing that of Indian markets, which have posted a negative return of around 4 percent over the same period. Japan's Nikkei 225 has surged nearly 63 percent, while the S&P 500 has delivered nearly 30 percent.

Global Indices vs. Indian Indices

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Despite the strong performance of global indices, international mutual funds in India often pause fresh investments after hitting investment limits set by the Reserve Bank of India and the Securities and Exchange Board of India. However, this does not mean that investors cannot access global markets at all.

The Hidden Global Exposure

Several domestic mutual funds quietly invest a part of their portfolio in overseas stocks, providing global exposure to investors even if they are investing in an "Indian" fund. We looked at domestic funds with at least 3 percent exposure to overseas equities and found some interesting trends.

Top Funds with Overseas Exposure

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These funds, particularly sectoral and thematic funds, have shown the highest overseas exposure, with technology and healthcare being the most prominent sectors. Diversified funds, on the other hand, have more measured exposure, with SBI Focused Fund allocating 12.5 percent, DSP Value Fund 10.9 percent, and Parag Parikh Flexi Cap Fund 10.6 percent towards international stocks.

Where Global Exposure is Working

Across categories, several domestic funds with overseas exposure have delivered healthy gains over the past year, showing how global allocation can quietly add to returns when markets are supportive. Funds with a mix of themes and asset classes, such as ICICI Prudential Commodities Fund, DSP Multi Asset Allocation Fund, SBI Children's Fund, and SBI Focused Fund, have led the pack.

However, not every fund has participated equally, with some technology-heavy schemes experiencing mild declines over the past year. Nevertheless, funds with moderate overseas exposure and more balanced portfolios have held up well, even in the current market.

Why Global Exposure Matters

Global exposure provides access to companies and sectors that don't exist in India at the same scale, such as Apple, Microsoft, or Nvidia. Industry experts say that global exposure isn't a bad idea, it's just not a free lunch. It gives investors the opportunity to diversify their portfolios and tap into global growth opportunities.