ICICIdirect investors can now access portfolios of global asset managers. Should you invest?

Indian investors looking for diversification to international markets now have one more option. ICICIdirect is offering domestic investors access to several portfolios of international stocks, which mirror portfolios of leading global asset managers.

ICICIdirect has tied-up with US-based Interactive Advisors, which creates these portfolios with the help of its investment team and uses data from the global asset managers.

Investors can choose from 70 such portfolios available on ICICIdirect.

Interactive Advisors have built portfolios using data from global asset managers such as Legg Mason (recently acquired by Franklin Templeton Investments), State Street Global Advisors (world’s 4^th largest asset manager), Wisdom Tree, etc.

Interactive Advisors, which is registered and regulated by Securities and Exchange Commission of US, is a subsidiary of Interactive Brokers Group.

There won’t be any broking charge on buying and selling of these portfolios, but investors will be charged an asset management fee. The fees start from as low as 33 basis points, and that would vary depending upon the portfolio and investment strategy.

The minimum investment is $100 or around Rs 7,400 at current foreign exchange rate.

“Customers have been asking us for a facility where they could have experts guiding them for better investment decisions. We have gone one step further by getting access to a curated list of theme-based portfolios, some based on models constructed by renowned fund managers, for our customers,” said Anupam Guha, head-private wealth management, ICICI Securities.

“These are actively-managed portfolios and hence will come with features like rebalancing,” he added.

Investing in international markets is important for diversification. But, when you pick a particular investment strategy, you are betting on the fund manager or asset manager’s strategy to outperform the benchmark indices in the international market.

"A retail investor may not be well aware of the various nuances of the asset manager's strategy. Also, certain investment strategy may work in certain phase of the market, while it may not work in others," says Vinayak Savanur, founder and chief investment officer, Sukanidhi Investment Advisors, which advises clients on mutual funds and stocks.

Financial advisors say a passively-managed index fund is a good option for international diversification.

“In developed markets like US, we have seen that it has not been easy for actively-managed funds to outperform benchmark indices. That’s the reason passively-managed funds have become quite popular in such markets,” says Vishal Dhawan, founder and chief executive officer at Plan Ahead Wealth Advisors.

“A passively-managed index fund, tracking US index like S&P 500, is a better way of taking exposure to US market. It will give you a well-diversified portfolio, while making sure that you’d at least get benchmark returns,” he adds.

However, investing in a portfolio of stocks run by well-known asset managers -- like those being offered by ICICdirect -- is a better alternative for investors directly investing in international stocks.