US market at record highs, China still cheap: Where should Indian investors invest?

With Indian equities witnessing bouts of volatility for months now, many investors are looking overseas for stability and growth.

Markets such as the US and China have delivered strong returns, prompting a common question: Should Indian investors diversify globally, and if so, where should they invest? And how much of their portfolio should they allocate abroad?

“Honestly, I don’t think it’s a US-or-China choice for most Indian investors. They’re two very different markets, and they’re doing different things right now,” says Viram Shah, Founder and CEO, Vested Finance.

How the two markets are different from each other:

The US is where the growth and the money are. But it’s expensive, and it’s very top-heavy. A few giant tech companies now make up almost one-third of the S&P 500, and the index is trading at about 22 times expected earnings. That has worked well while the market kept rising

“The problem is, when you buy ‘the US market’ today, you’re mostly buying a handful of very big companies. People should be clear-eyed about that,” Shah said.

China is kind of the opposite. Even after a strong 2025, it is still much cheaper than the US market, trading at about 11 to 13 times expected earnings—roughly half the US valuation. And, hence, it looks cheaper. But it’s cheaper for a reason. You’ve got policy risk, geopolitics, a weak property market, and a lot of foreign money that hasn’t come back yet. Something can stay cheap for a long time.

“So I wouldn’t try to pick a winner. I’d ask what each one does for you. The US gives you scale and the best companies in the world. China gives you a low starting price and a different set of things driving it, and because the two don’t always move together, holding both actually helps.”

How Indian investors can participate in the US and China markets

For most investors, the easiest way to invest is through ETFs rather than picking individual stocks. In the US, you can buy an S&P 500 or total market ETF. If you’re worried that a few big tech companies dominate the index, you can choose an equal-weight S&P 500 ETF, where each company gets a similar share.

For China, most people invest through US-listed ETFs. “There’s a broad-China fund that covers the big names across the mainland, Hong Kong and US-listed shares in one line.”

How much should they be part of your portfolio?

For beginners, the portfolio should be around 15-25%. As it matures, we can have more and better profiles, Shah recommends.

Otherwise, one can start with 15-25%. A slightly aggressive profile can be around 50%. We have seen some users on our platform, which is 100% global market allocation with 0% domestic allocation, but that is a very small percentage. Usually, people should allocate around 30-35% to the global market, he adds.