Indians sent a record amount of money abroad in June to buy equity and debt, accelerating a trend among local investors to diversify their portfolios overseas.
Resident individuals remitted $457 million for the month through the Liberalized Remittance Scheme for buying such assets, according to data published by the Reserve Bank of India late Tuesday.
While the sum is small compared with $3 billion in inflows into domestic equity funds alone during the month, it shows a growing culture of global diversification in India, where investors have traditionally favored gold, term deposits and real estate.
The lackluster performance of local equities has also prompted Indians to look outside. The benchmark NSE Nifty 50 Index is down more than 3 per cent over the past two years, while the S&P 500 Index has gained 37 per cent.
Overseas access has also become easier as the country’s tax-free financial hub, GIFT City, helps asset managers launch plans for outbound investments. Funds incorporated out of the business district also avoid the $7 billion industry-wide cap that the market regulator imposed on local funds’ overseas investments.
Asset managers are making it easy for individual investors to buy stocks and bonds overseas. PPFAS Alternate Asset Managers IFSC Pvt. reduced the minimum investment in its GIFT City-based outbound funds from $5,000 to $500. The change will apply to its two passive funds tracking the S&P 500 and Nasdaq 100 indexes.
Mutual funds investing overseas through the fund-of-funds route also held assets worth 465.5 billion rupees ($4.9 billion) as of July 31, according to data from the industry body AMFI.