Right Time For Global Diversification?

With fallin global indices, it’s time for investment bevond Indian shores. But only for the long haul.

- By Aprajita Sharma

FACEBOOK, TWITTER, MICROSOFT AND AMAZON—the bigwigs of the tech world have been on a firing spree. Twitter has laid off50% employees. Facebook has fired 11,000. Amazon and Microsoft are not far behind. All is not well with global big tech firms after phenomenal growth following Covid-19 outbreak, a performance that built massive euphoria around global investing, especially in technology stocks. Assets under management (AUM) of fund of funds investing overseas jumped a whopping 709% from `2,734.36 crore in March 2020 to `22,127.60 crore in January 2022. The MF industry cannot invest more than $7 billion in global securities—a limit specified by Reserve Bank of India (RBI) to check drain on forex reserves. The respective fund house limit is $1 billion. With fund houses reaching industry ceiling, Sebi prohibited them from accepting fresh inflows from February 2. Did this mark the end of the road for global investing by Indians? Should you avoid global diversification at this stage, especially when majority of stock markets across the world, including the biggest ones in U.S., have been under pressure for several quarters and India has been a standout performer? A vehement no!

Most AMCs have started accepting fresh inflows. Moreover, global markets are trading at attractive valuations after falling sharply in 2022. Though the euphoria of the 2020-2021 period is missing, this is precisely the reason it may be a good time to go global.

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