Investing beyond the US: A global diversification guide for Indian investors

Indian investors must identify the right vehicle for investing abroad and ensure that the exposure aligns with their long-term goals

For years, global investing for Indian investors has largely revolved around the United States, especially with household names like Apple, Google, and Microsoft driving strong investor interest. But the global economy doesn’t stop at Silicon Valley. With vibrant economies in Europe, Asia, Latin America, and even emerging parts of Africa, there's a world of opportunity waiting beyond American shores.

In 2025, several global markets — particularly in Europe — have outperformed the US. South Korea has posted a strong rebound with gains over 30 percent year-to-date, while Poland and the Czech Republic have delivered over 50 percent returns. This resurgence, combined with a rotation of capital out of U.S. equities, has prompted Indian investors to seek diversification not just into the US, but also beyond it.

So how exactly can Indian investors access global markets outside the US, while managing regulatory, operational, and currency-related challenges? Here's a detailed look at the various methods:

1. American Depositary Receipts (ADRs)
ADRs are financial instruments that allow investors to buy shares of foreign companies through U.S. exchanges. While they’re technically still linked to the U.S. market, ADRs offer access to international businesses from countries like Japan, Germany, Switzerland, and beyond. For example, you can gain exposure to Nestlé, Toyota, or Siemens — all through their respective ADRs listed on the NYSE or NASDAQ.

The benefit of ADRs lies in their convenience: they are traded in U.S. dollars, comply with U.S. regulatory standards, and eliminate the need to open foreign brokerage accounts. But they come with caveats. ADRs availability may be limited to large, established firms. Moreover, while they remove some friction, ADRs don’t fully insulate investors from foreign market and currency risks — they simply bundle those risks in a more familiar format.

2. International ETFs: The Most Flexible Gateway
One of the most popular ways to invest globally is through Exchange-Traded Funds (ETFs) listed in the U.S. that offer exposure to non-U.S. markets. These funds cover a wide range of regions, sectors, and investment themes — from European dividend payers to Japanese robotics firms or emerging markets like Vietnam and Mexico.

Some notable examples include:

●     Vanguard FTSE Europe ETF (VGK) — Offers exposure to developed European markets
●     iShares MSCI Japan ETF (EWJ) — Tracks Japan’s top stocks
●     iShares MSCI Emerging Markets ETF (EEM) — Provides broad emerging market exposure
●     Xtrackers MSCI Europe Hedged Equity ETF (DBEU) — A currency-hedged ETF, useful for INR-

USD risk mitigation
ETFs bring several advantages: low expense ratios (often between 0.1–0.5%), broad diversification, and daily liquidity. They can also be purchased via Indian platforms that offer access to U.S. markets, such as Vested. These ETFs require you to remit money under the Liberalised Remittance Scheme (LRS). Note that there is a 20% TCS (Tax Collected at Source) on outward remittances beyond 10 Lakhs — this can be claimed back when you file your income tax return.

3. Fund of Funds (FoFs): Global Exposure Without Foreign Remittance
For investors who want international exposure but don’t want to deal with LRS or foreign platforms, Fund of Funds (FoFs) are a viable option. These are mutual funds offered by Indian AMCs that invest in global mutual funds or ETFs managed by international partners.

You invest in INR, and the AMC takes care of the foreign investments on your behalf.

FoFs eliminate the need for currency conversion, foreign brokerage setup, or tax filing in another jurisdiction. However, they tend to be more expensive due to a double layer of fees — one for the Indian fund manager, and another for the underlying international fund. Moreover, in 2022, the RBI imposed limits on the total overseas assets Indian AMCs could hold.

4. Direct Investing via International Brokerages
For more seasoned investors, direct investing in global equities via platforms like Vested, Interactive Brokers, Saxo Bank. This approach gives you access to nearly every listed company across continents — from German engineering firms to Australian mining giants or Korean chipmakers.

The benefits include full control, a wider universe of securities, and the ability to design a bespoke portfolio. However, this comes at a cost. You’ll need to handle:

●     LRS compliance and remittance
●     Currency conversion charges (0.5%–1.5%)
●     Tax filing complexity — including dealing with dividend withholding taxes, foreign capital gains reporting, and navigating treaties like the Double Taxation Avoidance Agreement (DTAA)

5. Offshore Mutual Funds and PMS StructuresSome wealth management firms and private banks offer offshore funds or PMS products registered in foreign jurisdictions like Luxembourg, Ireland, or Singapore. Nowadays, a lot of these products are also coming up via GIFT City, which is within India itself. These products are tailored for affluent investors and typically require minimum investments starting at $25,000–$100,000.

They offer access to institutional-grade strategies — from global balanced funds to ESG-aligned thematic portfolios. But they’re not for the average retail investor. The paperwork, tax structuring, and ongoing compliance can be quite intensive. They’re also subject to LRS caps and TCS implications.

Regulatory and Tax Considerations in 2025

Under the Liberalised Remittance Scheme (LRS), Indian residents can remit up to $250,000 per financial year for investments and other permitted purposes. You also need to report these investments in Schedule FA (Foreign Assets) when filing your Indian income tax returns. Dividends and capital gains from foreign securities may be subject to tax in the source country, but India has DTAA arrangements with many countries that help avoid double taxation.

The world is getting smaller, and capital is more mobile than ever. But smart investing is not just about opening the door to international markets — it's about choosing the right path through it. For Indian investors, the routes are many: FoFs for convenience, Global ETFs for flexibility, ADRs for simplicity, or direct investing for control.

What matters most is alignment with your goals, your appetite for compliance, and your tolerance for currency and geopolitical risk. The tools are there — and with global markets increasingly uncorrelated, the diversification benefits are too important to ignore.