iconimg Wednesday, September 02, 2015

Dhirendra Kumar
April 23, 2013
Some investors have a misplaced sense of patriotism that keeps them from investing abroad. This is a mistake.

As an investment analyst and writer, I'd never imagined that I would have to hear a complaint of writing something unpatriotic and so I was more than a little surprised when this happened recently. It also taught me something about an aspect of some investors' mindset that I had no idea about. Hopefully, this doesn't apply to a majority of retail investors but one never knows.

Last week I wrote an email to all members of ValueResearch-Online.com about the latest cover story of Mutual Fund Insight, a magazine that I edit. The story is about investing in the US through mutual funds (MFs). I've been writing about the desirability of investing internationally for a long time, both in this newspaper and elsewhere. Geographical diversification is an important kind of diversification.

Since the government permits it, and there are a number of domestically available MFs that facilitate it, there is no reason for Indian investors to not allocate a part of their equity investments abroad. In fact, those who paid attention to this a few years ago have reaped rich rewards compared to investing in Indian markets. The gains have come both from better returns in global markets as well as currency gains.

However, after I sent out this email talking about investing in the US, I received a spate of replies which either directly or indirectly said that investing abroad is somehow unpatriotic and that the Indian markets were the best in the world. Many wrote with more than a little jingoistic fervour that the Indian markets had given great returns in the past and would again show their mettle to the world, or words to that effect.

While this kind of talk might strike a chord with some people, it has no place in investing. If it's OK to want foreigners to invest in India, then it's OK to invest abroad if it makes sense. There's good investing logic for anyone who invests in equity to invest some part of this money abroad. Don't let some strange idea of patriotism prevent you from taking the right decision. While this kind of talk might strike a chord with some.