For many Indian investors, the domestic stock market offers countless profitable opportunities, but focusing solely on domestic investments can limit growth potential. In today’s globalised world, it’s important to think beyond borders. One highly effective way to strengthen your portfolio is by diversifying into global markets, particularly US stocks.
While the United States maintains its place as the world’s largest economy in 2024, that’s just one reason to explore US stocks. Here are five additional reasons why you, as an Indian investor, should include US stocks in your portfolio.
1. Access to global leaders and innovation
The US is home to many of the largest and most influential companies in the world. Giants like Microsoft, Amazon, Apple, Tesla, Meta, and Alphabet dominate global markets and are often leaders in technological advancements and innovation. By investing in US stocks, you can tap into industries like technology, healthcare, artificial intelligence, pharma research, electric mobility, and energy, which may not be as developed in the Indian market.
2. Currency diversification
When you invest in US stocks you buy shares in US dollars. As of October 24, 2024, the exchange rate is ₹84.07 per dollar. Seven years ago, i.e., in 2017, the exchange rate stayed below ₹70 per dollar. As you can see, over time, the US dollar has strengthened significantly against the Indian rupee. This means that US stocks benefit you through both their performance and the appreciating value of the dollar. If the dollar continues to strengthen against the Indian rupee, the value of your investment will grow accordingly.
3. Geographical diversification
Diversification can take many forms—asset-based (e.g., stocks or bonds), sector-based (technology, healthcare, etc.), market-cap-based (large-cap, mid-cap, or small-cap), and geography-based. A geography-based diversification strategy means spreading investments across different countries to reduce reliance on a single economy. By investing in the US stock market, you can lower exposure to India-specific risks such as political instability, regulatory changes, or economic downturns. This approach also helps you reduce currency risk since the portfolio is not solely dependent on the Indian rupee.
4. Accessibility via fractional shares
Many think that US stocks are too expensive and not reliable for long-term investment. However, a key benefit of the US stock market is the option to buy fractional shares. This means that even if a stock is priced high, you don’t need to buy a full share. Instead, you can own a fraction of the stock based on the amount you are willing to invest. This makes high-value US stocks more accessible to Indian investors with smaller budgets.
5. Easy and convenient investing
In the past, investing in US stocks was complicated as well as expensive. However, online apps and platforms have made investing in US stocks from India much easier. With just a few clicks, you can buy and sell US stocks without the need for complicated procedures. Since many platforms also offer fractional shares, you can invest in high-value stocks with smaller amounts. Moreover, online platforms offer tools, research, and real-time data that make it simple to manage, track, and diversify your portfolio.
You can also utilise a US stock screener, a tool that helps filter stocks based on specific parameters like price, market capitalisation, or sector. This tool makes it easier to identify and invest in US stocks that match your investment strategy.
Key takeaways
As an Indian investor, exploring US stocks can unlock a wealth of new opportunities. You gain access to leading global companies, hedge against domestic market volatility, and benefit from potential currency appreciation. Moreover, with the availability of fractional shares and online platforms, investing in US stocks is now more affordable and convenient.
So, take the opportunity to diversify your portfolio by investing in US stocks and create a well-rounded strategy to maximise your long-term returns.
