According to brokerage estimates, the average age of investors investing in US markets in 2020 is 30-40 years.
In 2020 the outbreak of COVID-19 laid the foundation for New Normal around the world. It not only changed the way we live, eat and drink, but also changed the way we invest.
With new investors entering D-Street in 2020, veteran investors are now adopting more than one option to diversify their portfolios and try their luck in the global market. According to brokerage estimates, the average age of investors investing in US markets in 2020 is 30–40 years.
The concept of diversifying into US markets began last year. Many discount brokerage brokerage firms have started offering it. There has also been a lot of awareness among Indian young investors over the past few years about the strong performance of the US equity markets. Significantly, the S&P 500 index has given more than 50 per cent return in FY 2021.
Market giants recommend that it would not be a bad idea to start with a target-based initial allocation of 10% in your portfolio and then increase this allocation to 30-40%. Starting in the global market with mega-cap exposure will also not be a bad strategy.
Investors desirous of investing in the global market should hold at least 15-20 per cent of their portfolio for global markets. Then gradually this share can be increased to 50-70 per cent.
Statistics show that there is very little correlation between the Indian and US equity markets. This makes us a better choice for diversification of US markets. Apart from this, data from OmniScience Capital shows that the returns of the US market for the past 1, 3, 5 and 10 years have also been better than the Indian markets.
US markets will also remain attractive in FY22
Market experts say that the attractiveness of the American market among Indian investors will remain in FY 2022. Much better conditions remain for the global investment. The softening of interest rates, strong liquidity, the relief packages being announced by governments are also giving good support to the equity markets. Given this, it seems that the trend of international diversification started will continue even further.
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