Why Indian portfolios should allocate 10–30% to global assets in 2026, says VT Markets’ Ross Maxwell
SOURCE:The Economic Times
As Indian markets hit record highs in 2026, investors are increasingly seeking global diversification. Experts advise allocating 10-30% of portfolios to international assets to balance growth and stability, accessing innovation in AI, clean energy, and healthcare while reducing concentration risk.
As Indian equity markets enter 2026 at record highs, investors are increasingly recognising that strong domestic performance alone is not a substitute for diversification.
With global growth cycles, sector leadership, and monetary conditions evolving at different paces across regions, building exposure beyond India has become a strategic imperative rather than a tactical choice.
Speaking to Kshitij Anand of ETMarkets, Ross Maxwell, Global Strategy Operations Lead at VT Markets, explains why allocating 10–30% of an Indian portfolio to global assets can help investors balance growth and stability.
He shares insights on the rise in outbound investment queries, the global themes attracting Indian capital—from AI and clean energy to healthcare—and how international exposure can reduce concentration risk, smooth portfolio volatility, and provide access to innovation that remains underrepresented in domestic markets. Edited Excerpts –
Q) Global investing has become popular in the past few years, especially in India. What does the data suggest? The growth is seen in the number of investors opting for global diversification.
A) More awareness, easier access, and the search for diversification beyond domestic markets has been the drivers for global investing to become more popular in recent years among Indian investors. Assets under management (AUM) in overseas-focused mutual funds and ETFs from India has grown, reflecting growing participation from retail as well as high-net-worth investors.
The number of Indian investors holding international equities and global ETFs has increased steadily, supported by digital investment platforms and simplified remittance routes under the Liberalised Remittance Scheme (LRS). Surveys and fund house disclosures indicate that younger investors, particularly millennials, are leading the way, motivated by exposure to global technology leaders, healthcare innovators, and diversified currency risk.
Volatility in Indian markets and the strong performance of US equities in recent years reinforced the case for geographic diversification. The data points to a long-term rather than a short-term trend, with global diversification viewed as a vital strategy for Indian investors and their portfolios.
Q) As we step into 2026, are you seeing a noticeable rise in outbound investment queries from your clients despite domestic markets hitting record highs?
A) There is a noticeable rise in outbound investment queries which I think reflects a growing maturity among investors, who understand that strong market performance does not eliminate the need for diversification. Many investors now view global allocation not as a tactical move driven by domestic weakness, but as a strategic necessity for long-term portfolio success.
Record highs in domestic equities have prompted valuation-related concerns, encouraging investors to explore opportunities in markets where growth cycles, sector leadership, and monetary conditions are different. Awareness of global trends such as AI, clean energy, advanced manufacturing, and healthcare innovation has fuelled interest in accessing companies that are underrepresented in domestic indices.
Access to global markets for local investors through feeder funds, ETFs, and digital platforms has lowered barriers, making global exposure more accessible than in the past.
Currency diversification is another important consideration, particularly in an environment of evolving geopolitical risks and shifting interest rate cycles.
Q) What major global themes are attracting Indian investors today—AI, tech, clean energy, healthcare, commodities?
A) Indian investors today are increasingly guided by global themes that offer long-term structural growth and diversification beyond domestic opportunities. AI remains one of the most dominant themes, driven by its huge impact across industries such as software, semiconductors, automation, and data infrastructure.
Investors are particularly attracted to global leaders in AI platforms, cloud computing, and chip manufacturing that are not easily accessible through Indian markets. Tech also continues to attract in areas that support sustained global digitisation, such as cybersecurity and digital payments.
Government policy and the global push toward decarbonisation, means clean energy is also a strong focus. Indian investors are looking at renewable power, electric vehicles, battery storage, and hydrogen for long-term growth opportunities.
Ageing populations in developed markets and increased spending on biotechnology, medical devices, and innovation-driven pharmaceuticals, keep investors interested in the healthcare sector.
Commodities also attract attention from investors but are more cyclical. Investors view these as inflation hedges but also as beneficiaries of global supply-chain realignment.
Q) What key changes under the Liberalised Remittance Scheme (LRS) or other regulations should investors be aware of for 2026?
A) Investors should remain mindful of a few key regulatory aspects under India’s Liberalised Remittance Scheme (LRS) and related overseas investment rules.
The overall LRS limit of USD 250,000 per individual per financial year continues to be the primary framework for outbound investments, covering overseas equities, funds, and other permitted assets.
The collection of tax at source on foreign remittances remains a liquidity and cash-flow factor, even though it is creditable against final tax liability.
Investors should also be aware of closer regulatory monitoring of overseas fund limits, which in the past led to temporary suspensions of international fund inflows when aggregate caps were breached.
Compliance requirements, including disclosure of foreign assets and income in tax returns, are receiving increased scrutiny. With global regulations also evolving around transparency, reporting, and anti-money laundering, investors need to be aware how platforms and intermediaries operate.
The intent is to facilitate global diversification, but investors should plan remittances thoughtfully, stay updated on tax implications, and ensure full compliance with reporting.
Q) How should investors navigate compliance, taxation, and reporting when putting money in overseas assets?
A) When investing in overseas assets, investors should approach compliance, taxation, and reporting with careful planning and discipline.
The first step is to ensure that all remittances are made through the correct channels, typically under the Liberalised Remittance Scheme, and within the allowed annual limits.
Proper documentation of each transaction is essential, including remittance advice, investment confirmations, and account statements, as these form the basis for future reporting and tax calculations.
From a tax perspective, investors must understand how overseas income is taxed in India, whether through capital gains, dividends, or interest, and be aware of applicable tax rates and holding-period rules.
Taxes paid abroad may be eligible for relief under Double Taxation Avoidance Agreements, but this requires accurate records and timely claims.
Reporting obligations are just as important, as foreign assets and income must be disclosed in the relevant schedules of the income tax return, even if no tax is payable in India.
Exchange-rate movements should also be tracked, as they impact taxable gains. Given the complexity, many investors benefit from professional advice or technology-enabled platforms that simplify compliance.
Q) How much of an average Indian investor’s portfolio should ideally be allocated to global assets in 2026?
A) A lot depends on the investor’s goals, time horizons and risk appetite, but I would suggest allocation to global assets for an average Indian investor should be in the range of 10% to 30% of the overall portfolio.
For investors with long-term horizons, a higher allocation toward the upper end of this range can help capture global growth themes and reduce dependence on domestic cycles.
More conservative investors may prefer a lower allocation, using global assets primarily for diversification and stability rather than aggressive growth.
Keeping allocations in this range will help balance India’s growth potential with exposure to global innovation, developed-market stability, and currency diversification.
Global investments also help smooth portfolio volatility, as different geographies and sectors tend to perform differently across market cycles.
Global allocation should be seen as strategic and long term, not a short-term tactical move based on market levels.
Q) Do global ETFs, mutual funds, or direct stock investing offer the most efficient exposure?
A) All have their own advantages, and it may depend on an investor’s experience, portfolio size, and objectives. Global ETFs are often the most cost-efficient and transparent option, as they provide diversified exposure to specific markets, sectors, or themes with relatively low expense ratios and high liquidity.
International mutual funds or feeder funds, on the other hand, suit investors who prefer professional management, systematic investing, and simpler tax and compliance handling, especially for those new to overseas markets.
Direct stock investing offers the highest degree of control, allowing investors to target specific global companies, but is more time intensive as it also requires deeper research, ongoing monitoring, and careful management of taxation and reporting.
For most Indian investors, using diversified ETFs or mutual funds as the core global allocation while selectively adding direct stocks for targeted exposure would be the best approach.
The most efficient route is not only down to the cost, but also the ease of execution, diversification benefits, and alignment with the investor’s long-term strategy.
Q) Which international markets look most attractive for Indian investors in 2026—US, Japan, Europe, China, or emerging markets?
A) I think it's important for Indian investors not to look for opportunities in one particular market but to be more selective for opportunities across regions, increasing geographic diversification.
The US continues to remain a core allocation due to its leadership in technology, AI, healthcare innovation, and capital markets. Despite some valuation concerns, the resilience of US markets and their global earnings exposure keep the market structurally appealing.
Japan is gaining renewed interest as corporate governance reforms, improving return ratios, and sustained monetary support have led to a re-rating of equities, making it an attractive diversification play.
It is vital to be more selective for opportunities in Europe as growth remains uneven across countries and is sensitive to policy and geopolitical developments. Industrials, clean energy, luxury goods, and global exporters, would be the main sectors to focus on.
China still offers long-term potential, but is generally approached more cautiously by Indian investors due to regulatory uncertainty, and geopolitical risks.
Emerging markets, including parts of Southeast Asia and Latin America, are also attractive due to favourable demographics, supply-chain diversification, and improving macro stability.
Indian investors in 2026 should look to the US as a core component for stability, Japan and Europe for diversification and value, and selective emerging markets for long-term growth, rather than looking to a single region or market.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)