Big banker tells rich Indians to stock up on foreign stocks

“The returns offered by some foreign markets are higher than those investors can get from Indian stocks,” said Srikanth Subramanian, Managing Director of Private Wealth Management at Kotak Investment Advisors Ltd. “This is not a short-term call, but a structural call, and as our conviction has grown, our model portfolio has seen its allocation to foreign equities quadruple in the past 15-18 months.”

Record interest rates and stimulus packages around the world have pushed global stocks to all-time highs during the pandemic. A local rule change by the Indian market regulator earlier this year increased the amount each mutual fund company can buy in overseas stocks to $ 1 billion, from $ 600 million, stimulating the appetite of Indians, said Subramanian.

The total amount invested in foreign stocks has increased more than 10-fold in the past 17 months to around 250 billion rupees ($ 3.4 billion) as Indians used feeder funds to enter the D class. ‘assets, Subramanian said, citing industry data. This could increase further, according to the wealth management unit of Kotak Mahindra Bank Ltd., India’s largest with more than Rs 4 trillion under management.

Some have also used the so-called liberalized money transfer program which allows an individual to send up to $ 250,000 abroad each year. The growing appetite for foreign stocks has also prompted some of India’s largest financial firms to offer international stock trading.

Here’s a look at Kotak’s model portfolio for an aggressive investor:

– Around 80% to equities, of which 20% is allocated to international equities and 15% to passive funds or smart beta ETFs

-10% of the portfolio is intended for fixed income securities and an additional 10% for alternative investments

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