Investors are
often advised to invest in International Mutual Fund to diversify their
portfolio.
To understand
this, we have summarised the data for Indian markets and US markets to help you
decide. For the comparison purpose, we have compiled the data of Nifty 50
(Indian market) and Nasdaq 100 (US market).
Annual
Returns
Price
comparison over the past decade shows a very low correlation. Low correlation
is a major reason why Indian investors should diversify their portfolio to
International equities.
* TRI - Total Return Index includes all types of returns generated (eg. Dividends)
Source: Investing.com
Last decade
performance shows that the US market has performed superior compared to Indian
Market. For the past 10 years, the Indian market (Nifty 50) have generated
returns of 6.91% on a CAGR basis. While the US market (Nasdaq 100) have posted
returns of 13.60% on a CAGR basis.
Dominant
sectors of Indian and US market
From the market
stats, we can observe that Indian markets are dominated by Financial giants.
Whereas, US markets are dominated by Technology giants.
Top Sectors and
Top 10 Companies of Nifty 50 (Indian Market):
Top Sectors and
Top 10 Companies of Nasdaq 100 (US Market):
Fundamentals
of Indian and US markets
Fundamentals
statistics reflect that the valuation of the US market is on the higher side
compared to the Indian market. However, Investors should understand that US
markets are dominated by Technology sectors, which generally have high
valuations. Concerning Dividend yields, the performance of both the markets is at
par.
US market
has given higher returns for longer
For the last decade (2010-2020), the US market has comfortably beaten the Indian market on short to long term horizon.
*Inception Date of Nifty 50 - April 1996
Inception Date of Nasdaq 100 - February 1971
With these comparisons, we
would like to conclude that US markets are more matured compared to Indian
markets and also beaten on a performance scale. Also, investors should
understand that for the last many decades, many new technologies and products
have been invented in the US and then flowing to other markets. We all are
aware that many US companies are part of the Fortune 500 group globally.
In addition to this,
Investors need to understand that factor of US Dollar-Indian Rupee, which also
generates positive returns for Indian Investors.
Therefore, we suggest
investors to allocate a small portion of their equity investments to
International equities to give exposure to the International market to their
portfolio.
There are many Mutual Fund
AMCs that are offering International Funds.
You may contact us for
further details and participate in International Markets.
Mota Investments
+91-7021741077
Turn Your Investments Into
Wealth
