Global diversification gains traction among Indian investors amidst rupee volatility

Indian Investors Flock to Global Markets as Currency Trends and Return Expectations Shift

Indian investors are increasingly looking beyond domestic markets, with currency trends and return expectations nudging portfolios toward global assets. This trend is driven by the low investment penetration in India, which stands at less than 5%, compared to around 60% in the US and 52% in the UK.

The global investing platform, Appreciate, founded by Subho Moulik, is at the forefront of this shift. The company is currently focused on investing opportunities for retail investors in the US through stocks, ETFs, and Mutual Funds. However, it is looking to expand its investing platform to over 15 other markets by the end of the year.

Indian portfolios have traditionally stayed fully local, unlike in most other markets where a meaningful share is invested globally. However, diversification brings lower risk and higher aggregate returns, especially given the continued depreciation of the Indian rupee. The rupee has weakened 13.8% against the dollar over recent years, providing a significant opportunity for global investors.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

The case for global investing is becoming clearer for retail investors, with any asset yielding less than 10% in India being effectively a negative real return once you factor in 6-7% inflation and taxation. Currency is a big part of that equation, with the rupee depreciation alone giving investors 4% in a bad year and 9-10% in a good year against the dollar.

There's also a behavioural shift among Indian investors, with the rise of global brands such as WhatsApp, iPhone, and Google listed in the US contributing to the disappearance of home bias. The process of investing overseas has also become far simpler, with onboarding and transactions now largely digital.

For investors, Subho Moulik advises starting to diversify rather than remain fully domestic. He recommends investing at least 30% abroad in indexes, ETFs, or individual stocks and 70% in India.

Appreciate's Plans for Growth

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

The platform is looking to expand investing opportunities for investors beyond the obvious choice of the US. It will have around 15 markets live on its platform by the end of 2026, including Hong Kong, Taiwan, and Korea. Alongside market expansion, the company is also broadening its product and advisory offerings.

It is building AI/ML-led tools focused on portfolio recommendations and plans to launch a public fund based on these models around June. The company is also working on global fund advisory and B2B solutions, and is in the process of applying for an IFSC investment advisor licence through GIFT City, in addition to its existing SEBI advisory licence.

A key part of the next phase is tapping non-resident Indian (NRI) investors. The company will be launching a product for NRIs in June, which will allow them to invest across Indian and global markets through a fully digital onboarding process.

Note: Investment penetration refers to the percentage of the population that invests in the market.