In this fascinating topic, host Sumaira Abidi had a highly informative and engaging chat with Vaibhav Shah, Head -Product, Marketing & Corporate Communications - Mirae Asset Global Investments and Prableen Bajpai Founder, FinFix Research and Analytics. Just as we plan our holiday destinations globally, we need to choose our investment destination. And if global investing starts with US markets, then where should we head to next, and how should we strategise our investment is the core of this 30-minute conversation.
The discussion opened by highlighting how global investment has become a dominant theme over the last 18 months. Vaibhav Shah drew attention to the fact that there is a growing trend amongst both retail and HNI in embracing this theme. While you cannot ignore the US market because it is 40-50 %, you cannot overlook other markets because a considerable part of innovation is happening there.
Prableen Bajpai echoed the same sentiment highlighting emerging markets like Greater China and Taiwan, especially with its semi-conductor industry making it a global favourite. Some funds also promote Australia and Europe as favourable investment markets.
To Sumaira’s question, is diversification the only reason for global investing? Vaibhav Shah answered that as an Investor – “you want themes that complement your existing portfolios or are not existing in your portfolio. Themes like technology innovations, AI, fintech, robotics are not present in India. If you want exposure to these, then you have to trade in those markets – primarily – the US and China.”
Prableen further stated why the US needs to be the core part of your global portfolio. This is because one is familiar with some of the names – Netflix, Apple. For your global investment to impact your portfolio, a 5-8% exposure is required to these other markets.
Another question raised the point of deciding where one should invest. Prableen offered some solid advice by saying that a country with decent economic growth could be an excellent choice to start with. For example – the US with 25% GDP and China with 17% GDP are dominant economies and growing at 6-8%.
On the question of going the ETF way in global investing, Vaibhav stated that 70% of funds in the US aren’t able to beat the index, and hence, it is essential to study and understand the bench. Another factor to be considered is the expense ratio, and it is advisable to go for low-cost funds to make your entry worthwhile in those markets.
Towards the end of the discussion, both Vaibhav and Prableen believed that Passive investment through Fund of Funds, ETFs is an excellent way to start investing in global markets.
Watch this highly insightful webinar to start your global investment journey beyond the US markets.