Why 10–20% global allocation makes sense for most Indian investors, Inderbir Singh Jolly decodes

As Indian equity markets continue to scale new highs, investors are increasingly recognising that long-term wealth creation cannot rely on domestic opportunities alone.With India accounting for just a small share of global market capitalisation, a large universe of innovation, growth themes, and diversification benefits lies overseas.In this interaction with Kshitij Anand of ETMarkets, Inderbir Singh Jolly, CEO of PL Wealth Management, explains why allocating 10–20% of a portfolio to global assets is becoming a prudent strategy for most Indian investors.He outlines how global exposure can enhance resilience through access to international themes, currency diversification, and broader market opportunities—making global investing a core, rather than optional, element of modern portfolios. Edited Excerpts –Q) Global investing has become popular in the past few years, especially in India. What does data suggest?A) The trends are unmistakable. India accounts for only 4–4.5% of global equity market capitalisation, meaning more than 95% of investable global opportunities lie outside domestic markets.This alone makes a compelling case for international diversification. RBI data shows a second, equally powerful trend: Indian residents’ overseas financial assets grew sharply in FY2024–25, crossing roughly USD 1 trillion, reflecting a structural shift towards global asset ownership.This is no longer a niche allocation — global investing is now a mainstream decision for Indian households and wealth portfolios.Q) As we step in 2026, are you seeing a noticeable rise in outbound investment queries from your clients despite domestic markets hitting record highs?A) Yes — in fact, strong domestic markets have amplified the desire for global balance. Investors increasingly recognise that India’s growth story and global innovation cycles complement each other, rather than compete.Outward remittances under the Liberalised Remittance Scheme (LRS) remain significant. According to the RBI’s DBIE dataset, LRS outflows in FY2024–25 totalled approximately USD 29.6 billion, with a rising share directed towards investments such as equities, ETFs, and global funds.Interest in 2026 continues to strengthen, especially in the US, Japan, and global thematic solutions, signalling greater portfolio sophistication.Q) What major global themes are attracting Indian investors today — AI, tech, clean energy, healthcare, commodities?A) Technology and AI-centric innovation remain at the forefront. The largest U.S. technology companies represent nearly 30% of the S&P 500’s market capitalisation, illustrating the concentration of global innovation and scale.In addition to tech and AI, investors are allocating to:Clean energy, a sector receiving nearly USD 2 trillion in global investment in 2024 (IEA World Energy Investment report).Healthcare and life sciences, a category with an estimated global market size in the USD 8–11 trillion range.These long-duration structural themes have limited pure-play representation in India, making global exposure essential for capturing them.Q) What key changes under the Liberalised Remittance Scheme (LRS) or other regulations should investors be aware of for 2026?A) The USD 250,000 LRS limit remains unchanged, but the regulatory environment is shifting toward enhanced compliance, transparency, and reporting discipline.Authorities emphasise:Accurate TCS complianceProper reporting of foreign assets (Schedule FA)Traceability of investment flows through authorised channelsThe message from regulators is clear: India encourages outward investment — provided it is transparent, well-documented, and compliant.Q) How should investors navigate compliance, taxation, and reporting when putting money in overseas assets?A) Global investing is operationally simple when done correctly. Investors must:File accurate LRS declarations with authorised dealersUnderstand capital gains taxation on foreign assetsEnsure proper reporting in Schedule FA of the income-tax returnAs overseas wealth held by Indian residents grows, compliance is a critical portfolio responsibility. Using regulated platforms or licensed advisors significantly reduces execution, tax, and reporting risks.Q) How much of an average Indian investor’s portfolio should ideally be allocated to global assets in 2026?A) A diversified allocation of 10–20% to global assets is generally suitable for most investors, balancing India’s high return potential with access to global innovation and currency diversification.Among high-net-worth investors, 25–40% global exposure is common, particularly for those seeking structural themes like AI, clean energy, biotech, or advanced manufacturing.Q) Do global ETFs, mutual funds, or direct stock investing offer the most efficient exposure?A) The most practical and cost-efficient channels remain:Global ETFs (direct or India-listed feeder routes)International mutual funds run by experienced asset managersThese provide diversification, transparent pricing, professional oversight, and simplified tax handling. More sophisticated investors may opt for direct global stock investing through LRS, but this requires comfort with currency volatility, foreign brokerage operations, and additional reporting obligations.Q) Which international markets look most attractive for Indian investors in 2026 — US, Japan, Europe, China, or emerging markets?A) The United States continues to anchor global allocations. With roughly 45% of global equity market capitalisation, the US leads decisively in technology, AI, semiconductors, and healthcare innovation.Japan has emerged as a compelling secondary allocation, supported by corporate governance reforms, attractive valuations, and strengthening earnings cycles. Emerging markets offer selective opportunities, Europe remains a tactical allocation, and China requires calibrated, risk-aware positioning.India’s economic trajectory remains strong, but global markets offer depth, innovation, and diversification that cannot be replicated domestically.With outbound flows rising, overseas asset ownership expanding, and global themes evolving rapidly, investors who incorporate a structured global allocation are better positioned for resilience and long-term wealth creation. Global investing is no longer optional — it is integral to a modern Indian portfolio.Also read | Ola Electric vs Ather Energy shares: Which EV bet looks stronger for your portfolio right now?(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times.)