Indian Investors Increase Overseas Exposure Amid Weak Domestic Market Returns

Indian investors are allocating more money to overseas markets as weaker domestic equity performance, sustained foreign outflows and rupee depreciation drive interest in global assets.

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According to Reserve Bank of India (RBI) data, Indians invested more than $2.2 billion in overseas equities and debt during the 11 months through February, marking a 60% increase compared with the same period a year ago.

Data from the Association of Mutual Funds in India (AMFI) also showed that assets managed through global feeder funds by domestic fund houses reached a record $4 billion in March.

Investors Shift Towards Global Diversification

Overseas investment growth arises from Indian investors’ efforts to diversify their investment portfolio outside the home country’s stock market. India contributes about 3% to the worldwide stock market, and overseas investment is gradually becoming a tool to mitigate concentration risks in investment portfolios.

A weaker rupee has also made foreign assets more attractive as returns from overseas investments receive currency-related gains.

The MSCI India Index has underperformed the broader emerging markets index by nearly 50% over the past year despite recovering from lows seen in March. Slower earnings growth and limited exposure to sectors such as semiconductors have weighed on Indian equities, while markets including Taiwan and South Korea have posted stronger gains.

Retail participation in overseas investing has also increased through digital investment platforms and simplified access routes.

Platforms And Fund Houses Expand Global Offerings

Vested Finance Inc. said assets on its platform crossed $1 billion in April, nearly doubling compared with the previous year. The platform allows Indian investors to buy overseas stocks directly.

India currently permits resident individuals to remit up to $250,000 annually overseas under the Liberalised Remittance Scheme.

Investment firms are also launching international products through GIFT City. DSP Asset Managers and PPFAS Asset Management have introduced outbound investment funds targeted at retail investors.

DSP’s Global Equity Fund, launched in June, invests primarily in U.S. equities while also allocating capital to markets including Taiwan, China and Europe.

Motilal Oswal Private Wealth said investors are increasingly looking for exposure to sectors such as artificial intelligence, semiconductors and data-centre infrastructure, which currently have limited representation in Indian markets.

Overseas Funds Deliver Higher Returns

Several overseas-focused mutual funds have reported strong returns over the past year. The HSBC Brazil Fund delivered gains of nearly 70%, while the Axis Greater China Fund rose around 65% during the same period.

At the same time, domestic mutual fund inflows remain strong. Monthly systematic investment plan inflows into Indian mutual funds have remained close to $3 billion, helping offset foreign investor outflows from local equities.

Brokerage companies and wealth management platforms have also been making global investments more widespread. Zerodha Broking, for instance, has said that it will provide facilities to invest in foreign shares, while State Street Corp. has started designing portfolios of foreign equities for Indian retail investors.

This trend to global investing reflects increased retail investor participation and access to foreign markets through digital platforms.