International exposure routes for your portfolio
THERE is a lot of interest among investors about ensuring some sort of international exposure in their portfolio. In several situations the investor will have some sort of indirect international exposure but they might not even be aware of it while in other cases the effort might be deliberate.
There are various ways in which the international exposure is achieved and hence the individual has to be aware of the route that they will be using.
Here are some of the ways in which this is actually done Direct investment: This is one of the simplest ways in which the investor can look an international investment. Under the direct investment route the investor will transfer the money abroad and then invest this in various assets.
Some of the ways in which this can be done is by looking at investing directly in stocks or mutual funds abroad and this will ensure that the international investment exposure objective is achieved.
There is a limit of $200,000 per person per year that is set by the Reserve Bank of India for Indians to invest their money abroad and hence this is a route that can be adopted. However, this might not be very cost effective and easy to manage when the investment amount is low.
Investment in other assets: The other option that is available for the individual to make use of the overseas investment limit is by looking at several assets or asset classes that are different in nature from equities or debt. This will mean that the exposure abroad is to areas such as real estate or even commodities or other structured products that one might not be easily accessible in India.
For example, one can take an exposure to orange juice prices, which is not possible in the Indian market. This is meant for investors who are well versed with the functioning of these areas and hence even though the investment might seem to be direct there is a slight difference that is witnessed in the entire process as well as the end exposure.
Through Indian gateway: One of the other ways in which the same objective of international exposure can be achieved by the investor by sitting in India is by tapping a route that is available in the country. There are several brokerage houses that give the investor the option to take a foreign exposure by providing linkages to other international brokers and this will mean that the investor will be able to access the international markets.
All that he needs to do is set up the account with the foreign brokerage through the Indian broker.
This has to be followed by maintaining the required funds. The investor will require a large amount that they will have to invest but this is not a difficult thing to achieve especially when the international investment seeks to diversify the portfolio.
Mutual funds: Another route that can be effectively utilised is the mutual fund route and here the investor can choose the kind of exposure that they want. This will ensure that they are able to access the international markets while sitting at home while still using the funds in Indian rupees.
Even the manner of investment is similar to what that they would adopt for other routes in India. The most important thing in this entire option is the variety that the mutual funds will provide for the investor. This will ensure that there is a choice that is available and that can be utilised.
The mutual funds offer a wide range of options, which includes specific country investments as well as sector investments and even investments in commodities or companies in the commodities sector. The investor can also start off in a small manner and then increase their exposure as time passes and they gain the required experience. This is a good thing that can be very beneficial for the investor and they have to make the best out of the situation depending upon their choice.
