Rising Trend: Indian Investors Shift Focus to Foreign Markets
Why an increasing number of Indian investors are turning to foreign markets
The Economic TimesImage: The Economic Times
An increasing number of Indian investors are diversifying their portfolios by investing abroad, driven by weak domestic returns and a depreciating rupee. Investments in overseas equities and debt surged to over $2.2 billion, marking a 60% increase from the previous year, as local markets lag behind global counterparts.
- 01Indian investments in foreign markets rose to over $2.2 billion, a 60% increase year-on-year.
- 02The MSCI India Index has underperformed compared to emerging markets, trailing by nearly 50%.
- 03Platforms enabling foreign investments are seeing significant growth, with Vested Finance's assets reaching $1 billion.
- 04New outbound funds launched by local asset managers are catering to the demand for global exposure.
- 05The shift is fueled by a desire for diversification and access to sectors like artificial intelligence and semiconductors.
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Indian investors are increasingly seeking opportunities in foreign markets, with investments in overseas equities and debt exceeding $2.2 billion in the 11 months through February, representing a 60% increase from the previous year, according to the Reserve Bank of India. This shift is largely driven by the underperformance of local stocks, as the MSCI India Index has lagged behind its emerging market peers by nearly 50% over the past year. Investors are motivated by the potential for diversification and the appeal of sectors such as artificial intelligence and semiconductors, which are less represented in India's $5 trillion equity market.
Platforms facilitating foreign investments are experiencing rapid growth. Vested Finance Inc. reported that its assets reached $1 billion in April, doubling from a year ago, as more investors seek to capitalize on global opportunities. Local asset managers are responding to this trend by launching outbound funds, such as DSP's Global Equity Fund, which focuses on US stocks and also includes investments in Taiwan, China, and Europe.
Despite the growing interest, global investments still represent a small portion of overall flows, with local stocks and bonds remaining dominant. However, overseas-focused funds have shown strong performance, with some, like the HSBC Brazil Fund, gaining nearly 70% in the past year. As the investment landscape evolves, more platforms are emerging to facilitate access to global markets for Indian investors.
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This trend allows Indian investors to diversify their portfolios and access high-growth sectors that are limited in the domestic market, potentially leading to better long-term returns.
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