Global Indices Skewed Beyond India: Women in Wealth Make Case for Offshore Diversification

Global Equity Benchmarks vs. Indian Investor Portfolios

Key Takeaways:

• Global indices, such as the MSCI Emerging Markets Index, allocate capital dynamically across regions and sectors, whereas Indian portfolios tend to remain heavily skewed toward domestic equities.
• India accounts for only 13% of the MSCI Emerging Markets Index, while countries like China have a higher weightage.

Global Capital vs. Local Portfolios

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The structure of global indices highlights a broader mismatch between global capital allocation and local portfolios. Indian investors exhibit a notable home bias, which can limit exposure to global opportunities, particularly in sectors with limited representation in India, such as semiconductors or frontier technologies.

Concentration Risks in Global Indices

Global indices also expose investors to concentration risks, where a handful of companies or countries dominate returns. This highlights the importance of diversified global exposure to mitigate such risks.

The Need for Diversified Global Exposure

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Experts caution against viewing offshore investing through a narrow lens. Market leadership has historically shifted across regions, and the US-dominated returns of the past decade do not reflect the broader global landscape. Diversified global exposure can help investors capture opportunities in emerging markets and sectors with limited representation in India.

Timing Global Markets

Identifying and acting on global opportunities consistently is challenging due to the fast-changing revenue drivers and market trends. Investors may consider broad-based exposure, such as index-linked strategies, to mitigate this challenge.

Global Exposure Beyond Public Markets

From a private markets perspective, global diversification should be viewed through the lens of access to themes and opportunities. India is increasingly attracting global capital, particularly in private equity, as exit activity strengthens.

Balancing Home Strength with Global Diversification

While India remains the core of investor portfolios due to its structural growth outlook, global exposure can complement domestic investments. A balanced approach can help investors capture opportunities in both domestic and global markets.