How Indians can make international investments part of their portfolio | Personal Finance

While the Indian economy is a global bright spot, investing only in domestic stocks is aiming low. Investing internationally allows you to participate in technology giants, luxury brands and innovative sectors that are not on the NSE or the BSE. More importantly, it provides a hedge against currency depreciation. If the rupee falls against the dollar, your international investments gain value even if the stock prices stay flat. However, global investing isn’t a get-rich-quick scheme; it is a strategic move to lower your portfolio’s overall volatility by spreading your bets across several geographies.

 

Start with the goal, time horizon and role of risk before picking products

International investing should never be your first investment. It belongs in the growth category of a mature portfolio. Before you go global, you must have your local foundation (emergency fund, health insurance and a solid domestic index fund) in place.

 
 

The primary goal for international exposure is usually diversification or a targeted goal such as a child’s foreign education or a global sabbatical. Because international markets behave differently than the Indian market, they often go up when India is flat, and vice versa. 

Decision rules for horizon & risk

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  Time horizon: You need a minimum of five to seven years. Between currency fluctuations and market cycles in the United States or Europe, short-term volatility can be brutal.

 

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  Role of risk: You are managing two risks simultaneously — market risk (the stocks going down) and currency risk (the rupee becoming stronger). For most Indian retail investors, the latter has historically worked in their favour, adding a 3-5 per cent hidden return annually as the rupee has depreciated.

  Primary vehicles for Indian investors

You don’t need a foreign bank account to start. There are three primary vehicles for Indians to go global: 

1. International mutual funds (feeder funds)

These are Indian mutual funds that feed your money into a larger global fund (such as the US Nasdaq 100 or S&P 500 funds). You pay in rupees, and the asset management company handles the conversion.

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  Pros: High convenience; no need for a specialised broking account.
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  Cons: Subject to the Securities and Exchange Board of India’s industry-wide investment limits, which can sometimes lead to funds stopping new inflows temporarily.

 

2. Direct equity via LRS

Under the liberalised remittance scheme (LRS), the RBI allows Indians to send up to $250,000 abroad per year. You can open an account with a platform (such as Indmoney or Vested) that partners with US brokers.

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  Pros: You can buy fractional shares (e.g., buy Rs 5,000 worth of a $500 stock).
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  Cons: High tax collected at source (TCS). As of 2026, remittances above Rs 7 lakh attract 20 per cent TCS, which you can claim back during your ITR filing, but it locks up your liquidity for months.

 

3. ETFs (exchange traded funds)

You can buy units of international ETFs (such as the Motilal Oswal Nasdaq 100 ETF) directly on the Indian stock exchange through your demat account.

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  Pros: Instant liquidity during market hours.
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  Cons: Tracking error and price-to-NAV gaps can sometimes mean you pay a premium over the actual value.

 

How to review performance, rebalance and avoid common decision errors

Reviewing an international portfolio requires a dual-lens approach. You must look at the underlying return (in dollars or euros) and the currency-adjusted return (in rupees).

 

The rebalancing rule

International exposure should ideally be 10 per cent to 15 per cent of your total equity portfolio. If the US market booms and your international slice grows to 25 per cent, it’s time to sell high and bring the money back into Indian equities. This ensures you aren’t over-exposed to a single country’s political or economic risk.

 

Common decision errors to avoid

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  Chasing the hot country: Don’t jump into a Japan or Vietnam fund just because it did 30 per cent last year. Stick to broad-based indices such as the S&P 500 or MSCI World Index.Ignoring the tax bite: As of 2026, international funds are taxed as non-equity assets. Gains are taxed at 12.5 per cent if held for more than 24 months. If sold before 24 months, they are added to your income and taxed at your slab rate.

 

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  Over-diversifying: Having five international funds usually means you just own the same top 10 global stocks (Apple, Microsoft, Nvidia) five times. One good S&P 500 fund is usually enough for most.

 

Action checklist for global investing

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  Check the LRS limits: If investing directly, ensure you stay within your annual $250,000 limit.
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  Automate via SIP: Use Indian feeder funds to automate small, monthly investments to average out both stock prices and currency rates.
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  Review TCS implications: If planning a large remittance (> Rs 7 lakh), consult a CA to understand the 20 per cent TCS impact on your cash flow.
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  Simplify: Start with a low-cost US index fund before exploring thematic global funds such as AI, clean energy or European luxury.
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  Track net returns: Use a consolidated portfolio tracker to see your total equity across India and abroad in a single view.

 

FAQs

Where should a beginner start and what should come first?

A beginner should start with a US-focused index mutual fund (S&P 500 or Nasdaq 100). These are the most liquid and transparent global markets. What should come first is ensuring your domestic portfolio is stable; global investing is the flavour, not the main course.

 

How much should be allocated to growth, stability and liquidity?

International markets are purely for growth. Therefore, do not put your emergency fund or money needed within three years here. A standard allocation is 10 per cent of your total equity portfolio. If you have a specific dollar-denominated goal (such as an MBA abroad), you can increase this to 20-25 per cent. 

What return numbers are actually useful and what do they hide?

The most useful number is the INR-denominated CAGR. It shows the true growth in your local purchasing power. These numbers often hide high volatility. A US fund might show 12 per cent returns, but that could be 8 per cent from the stock market and 4 per cent from the rupee falling. If the rupee suddenly strengthens, your returns could crash even if the US market stays steady.

 

How often should the portfolio or account be reviewed or changed?

Review your international allocation once every six months. Avoid checking it daily, as currency fluctuations can be noisy. Change your strategy only if your long-term goal changes or if there is a major structural change in the tax laws regarding global remittances.