|| SHANIWAR SAMWAD || 6-11-2021

 One of our known called to us enquire about the International stocks or it is better to invest through the fund of fund.

It is well-known fact that all the developed nations' returns are modest as compared to developing economies.

The return is somewhat stable and one major advantage, there is low inflation.

Another advantage is that when we invest our corpus that time exchange rate is different than when we redeem them. It adds to the overall returns.

 As all major corporates are working in our country and making good profit in that, which is getting added to its global corpus, and also market share is good or significant.

Right now we just celebrated Diwali, in which all corporates do around 35-40% of their business for the whole year.  

If we see the balance sheet of major global corporates, the overall profit has an amount that is generated from Indian operations. Take an example of Maruti Suzuki, in which they declared their investment in India is generating around 30-35% of revenue and profit with major market share.

There is one chronology that they have more cash or cash equivalent in comparison to our domestic stocks. for example, the cash or cash equivalent of Apple Computers is more than the total GDP of small countries altogether.

Now, coming back to the question raised above, how to define the quantum of investment one should do or should have a portfolio of stocks.

Ideally, one should not go beyond the 10-17% of overall AUM or portfolio in international investment.

All above argument is true as it reflects in their balance sheet, but the quantum of wealth created by them for shareholders is a big question mark.

Some times back, we read about the interesting story or comparison between Apple Computers and our homegrown HDFC Ltd. In comparison, Apple operates in more than 100 countries whereas HDFC Ltd. operates in India only. But if we see the wealth created and distributed to its shareholders, there is a massive difference between the two, HDFC has created and distributed wealth to its shareholder is 5000 times that of Apple Computers in the last 25 years.

One has to check the track record of all these stocks, moreover China plus one policy of major corporates, making them invest in our country. 

Now, our corporates are distributing the wealth they are creating as compared to past times. 

The next thirty to forty years will be developing due to size, demography, and population which will make or create wealth for all. 

Our market is second in transparency and compliance. The Government is trying to develop a robust Bond market both for corporates and Gsec. To increase retail participation, the Bharat Bond fund was launched, now retail investors are allowed to directly invest in bonds.

The fund of fund option is better than direct equity purchase by any individual. Fund houses can track the past returns as well as their future strategy as they have the depth for all these needed. Plus the exchange rate difference is there for us.