By Shrey Jain
Regarding Indian investments in the US market, investing in US stocks from India has experienced a surge in popularity, appealing to both experienced investors and ordinary individuals. The reasons for this growing trend range from wealth creation and geographical diversification to reducing dependence on the Indian economy. With well-defined taxation policies, feeder funds offer a convenient avenue for accessing foreign investments. Different geographies tend to show varying performance across different calendar years. This is why constructing a geographically diversified portfolio proves beneficial in the long term.
We see Indian investors opt to invest in stocks like Tesla and popular FAANG companies (Facebook, Amazon, Apple, Netflix, and Google) as a means to diversify geographically and safeguard against a depreciating rupee. Furthermore, the US, the world’s biggest market, is home to prominent multinational companies that generate their revenues and profits from diverse international sources.
As of August 5, 2023, the FAANG Portfolio has delivered an impressive 69.20% Year-To-Date return and a commendable 26.57% annualized return over the last decade. These companies’ products and services have a significant influence on societies worldwide and are counted among the largest companies globally.
Any major developments in the US have a considerable impact on the global market. However, the recent US rating downgrade may not significantly affect foreign inflow, as Fitch had already signalled about the possibility of such a downgrade in May. Although Markets for US Treasury bonds and the dollar index, which measures the US currency against a basket of six other currencies, were little moved by the news. Moreover, considering the historical precedent and the unique position of the US economy and currency, do not expect much impact from this move.
