S Naren’s Big Bet: From China to Brazil, the next big boom isn’t in India or the US

Indian investors could gain much from tapping into global equities outside the US and India, according to S Naren, chief investment officer of ICICI Prudential Mutual Fund. Speaking exclusively on The Wealth Podcast with N Mahalakshmi, Naren said most foreign markets — especially emerging economies like Korea, Brazil, Taiwan and China— are trading at cheap valuations and have severely underperformed India over the past decade and a half.

“With the exception of the US, most global markets have done very badly compared to India,” Naren said. “If you had a way of investing in them ex-US, there are pockets that have underperformed by a very large magnitude. That’s another opportunity that exists.”

Currently, Indian mutual funds face a $7 billion cap on overseas investments, a limit that has been fully used. Naren said any decision by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) to lift that ceiling could give domestic investors easier access to these undervalued markets. “If the option opens up, it’s a good way to invest abroad,” he said, adding that mutual fund channels would be simpler than the Liberalised Remittance Scheme (LRS), which he called “a much more complicated model.”

WATCH INTERVIEW HERE: From Quick Bucks to Global Bets: S Naren on Equities, Crypto, Gold & Avoiding Big Losses