Investing in US Stocks to Diversify Your Portfolio | Motilal Oswal

How to Diversify Your Portfolio by Investing in US Stocks

How many analysts and experts constantly advise potential investors to diversify portfolios? The majority do this, if not all. The main reason for gaining profit through investment is to have portfolio diversification as your strategy in investment. Portfolio diversification doesn’t just represent the mere variety of asset classes to invest in, but also means that inventors can invest in different markets, both domestic and global. 

Indian Investors and the Global Stock Market

In the recent decade, and some may have observed for several years now, Indians have increased their use of international products and services. In their quest for value for money and better quality, Indians have made it abundantly clear that they are savvy enough to know better. Nonetheless, this strong inclination for ‘all things foreign’ has not spread to the stock market. In fact, many investors look to US stocks, only to shy away. This may very well be because the bullish trend that has surrounded Indian equities of late has been more than Indian investors can handle. However, many investors are toying with thoughts of investing in US stocks, given the condition of the global economy and the underlying states of play at the end of the pandemic. 

Global Diversification

If you are a serious Indian investor, you would have, no doubt, thought to open a Demat account online. This is the easy part of investment. In case you have invested in the Indian stock market, your current portfolio stands to be exposed to domestic geopolitical risks and risks of a macroeconomic nature. This is so, in spite of you possessing an investment portfolio that may be hybrid. In India, an adverse event of a financial nature may topple your investment at the drop of a hat. In order to keep yourself safe, it is recommended that you look toward US stocks to invest further and mitigate your risk. 

How to Handle Global Portfolio Diversification

You can invest in US stocks in any of two methods. The first way, and one which is commonly practised, is through direct investment. The other way is via indirect investment. Direct investments simply mean that you may invest in the US stock market directly, opening a trading account. You may do this easily with a domestic brokerage or a foreign brokerage that has links with an Indian broker. Indirect investments, on the other hand, are made with investments in mutual funds, or exchange traded funds (ETFs). 

Where to Invest Abroad

The global stock market, especially the kind that deals with US stocks, is open to investment from Indian investors. Once you have a reputed Indian broker on your side, one like Motilal Oswal, you get the option of curated stock portfolios of global stock recommendations for your investment needs. The advantage that global stocks hold is that you can choose international companies to invest in, and these are relatively well-insulated from any market plunges that occur in any one country. A good clue to select stocks would be to opt for shares of those companies that are fairly widely spread out across the world. 

Booming Sectors

The US markets are bursting with stocks that have a leading edge in several advancing sectors, like electronic mobility, artificial intelligence, pharmaceutical research and other technologies of a mass-reach type. Investing in any of these sectors would repa profit in the long run and you can diversify your portfolio if you open a Demat account with Motilal Oswal and learn more on this subject.

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