Wealth managers at the ET Alpha Wealth Summit emphasize that geography diversification is gaining ground, but warn against knee-jerk reactions driven by India's recent market underperformance. According to First Global's Devina Mehra, the more urgent question is whether investors' overall asset allocation is right in the first place, rather than simply seeking global allocations. She cautions against treating the US as a global proxy, noting that long periods of US underperformance are well-documented, pointing to years after the dot-com crash when other markets significantly outran Wall Street. The discussion, moderated by ET Digital's Kshitij Anand, converged on a clear message: diversification matters, but it should be deliberate — not driven by recency bias.
Indian investors are increasingly exploring international mutual funds following strong global market returns in recent years. According to reports from Zee Business, financial experts Mohit Gang, CEO of Moneyfront, and Mrin Agarwal, Founder of Finsafe, emphasized that international funds can play an important role in diversification, but investors must approach them carefully and with a long-term perspective. Gang explained that most mutual fund investments in India typically go into domestic equities, while international funds allow investment in global markets including US, Europe, China, and emerging economies.
India represents less than 3% of global market capitalisation, making a purely India-focused portfolio statistically hard to justify, as highlighted by First Global's Devina Mehra at the ET Alpha Wealth Summit. She also pointed to the rupee's long-term depreciation, from ₹12 to the dollar when she started her career, as a structural argument for holding hard currency assets. The Indian rupee's 3.5% annual depreciation against the US dollar over the last 20 years can add to returns when investing globally. Moving beyond the knee-jerk perspective of investing globally only when India's markets disappoint, Mehra argues that the logic for global diversification is now stronger than ever.
According to Finsafe founder Mrin Agarwal, investors now have multiple ways to access global markets, including through the Liberalised Remittance Scheme (LRS), which allows individuals to use up to $250,000 per year for investments, education, medical purposes, and other defined uses. GIFT City is also emerging as an alternative route, allowing investments in foreign stocks, ETFs, and funds with global exposure, though Agarwal noted that only about four mutual fund schemes are currently available with limited long-term performance data.
According to First Global's Devina Mehra, the biggest traps for Indian investors venturing abroad include knee-jerk reactions to geopolitics, a US-centric worldview, and poor fund manager selection. She warns against panic-selling after drawdowns, citing the example of Nasdaq ETFs in India during the previous global fund boom that subsequently fell sharply. Most critically, she emphasizes that just because you can form a GIFT City product does not mean you know how to manage global money. She cited Gift City funds as a recent example, saying most have significantly underperformed their benchmarks over the past six months to one year, stressing that global investing is genuinely complex and requires proper management.
