US Tech Boom's Valuations Warrant Caution Amid Comparison to Dotcom Bubble

Global Investing Trends in India: A Shift Away from US Tech

Indian investors are increasingly looking beyond domestic markets, driven by a decade-long financialisation of households and improved accessibility to global markets. According to Viram Shah, CEO and Founder of Vested Finance, this trend is a natural progression from fixed deposits to mutual funds and direct equity investments.

Global Markets Deliver Strong Performance

Global markets have delivered strong performance over the past year, fueling investor interest in international investing. The process of opening a US brokerage account from India has become significantly easier, reducing the friction that once limited global investing to ultra-high-net-worth individuals (UHNIs). Today, investors can complete the process through a smartphone in a matter of minutes.

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Shift from US Tech Investing

International investing in India was largely focused on US tech for years. However, the composition of global portfolios has evolved. Investors are now more likely to build around an S&P 500 or total-market ETF and complement it with a few high-conviction stock positions. From Vested Finance's platform numbers, the share of new account allocations going into pure single-stock US tech has dropped from roughly two-thirds in 2022 to under 40% now.

Concerns Over US Tech Valuations

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Viram Shah expresses concerns over US tech valuations, citing the concentration of the Magnificent Seven (Apple, Microsoft, Google, Amazon, Tesla, Nvidia, and Meta) in the S&P 500, which now accounts for roughly 35% of the market capitalisation. The CAPE ratio is close to 40, and the Buffett Indicator stands at about 230% of GDP.

Misconceptions About International Diversification

The biggest misconception among Indian retail investors is that buying the S&P 500 constitutes diversification. However, the index is heavily concentrated in technology and AI, with the top 10 companies accounting for roughly 40% of the index. Investors often overlook the importance of currency movements and the need for consistency in investing.

Concerns Over AI Concentration

Viram Shah is concerned about the concentration of investments in AI names, which may lead to a "globalised meme-stock era" in a more sophisticated wrapper. However, he notes that this is not the same as the 2021 meme-stock boom, which involved retail buying of companies with deteriorating fundamentals based on social media narratives.

Access vs. Literacy

The expansion of access to global investing products is a positive trend, but it must be matched with improved investor literacy. Vested Finance focuses on clear risk disclosures, guardrails for complex products, and investor education to ensure that investors make informed decisions.

Investment Allocation

If Viram Shah had to invest his own ₹1 crore today, he would allocate roughly 65-70% to India, mostly large-cap equities, with a smaller mid-cap slice and some debt exposure. Around 20-25% would go into global equities, combining a broad US market core, developed markets outside the US for diversification, and a small emerging markets ex-China allocation. Around 8-8% would be invested in gold as a tail-risk hedge, with the remainder kept in cash to capitalise on opportunities.

GIFT City's Potential

GIFT City remains an underappreciated aspect of India's global investing story. With over 600 entities operating in GIFT City and recent launches by fund houses lowering investment thresholds, retail participation has begun to scale. GIFT City operates outside SEBI's $7 billion overseas mutual fund industry cap, which has been a bottleneck in Indian global investing.

Future Plans

Vested Finance plans to expand beyond the US into markets such as the UK, Japan, Europe, and select emerging economies, as diversification in India remains at an early stage. The company will also broaden its product suite to include fixed income, structured global ETFs, and GIFT City-domiciled vehicles. Investing heavily in advisor tools and investor education is also a priority to ensure sustainable growth.