Invest abroad to beat market risks, but err on the side of caution

Brokerages, online platforms are making foraying into foreign equities easier

If one compares the year-to-date returns of the Nifty 50 and the S&P 500 index, the difference is quite stark (see table). The US index has also beaten the Indian index over the five- and 10-year horizons. While past returns may not get repeated, numbers like these are causing an increasing number of Indian investors to diversify internationally. 

Foraying overseas reduces market-specific risk. “Geographical diversifi-cation adds stability to the portfolio by reducing country-specific risks,” says Rahul Agarwal, director, EZ Wealth. Having exposure to different markets reduces the hit to an investor’s portfolio when his domestic market is underperforming.  Investing abroad