Case for investing abroad despite record U.S. market gains
Investors are being encouraged to diversify their portfolios by looking beyond the borders of the United States. Dave Nadig, president and director of research at ETF.com, pointed out that many investors have an excessive amount of their funds tied up in U.S. markets, a phenomenon known as “home bias.” With Wall Street experiencing record highs, Nadig believes that now is a good time to consider investing internationally.
The iShares MSCI Emerging Markets ETF, for example, has seen a nearly 3% increase, reaching a 52-week high. Nadig suggests that investing abroad may offer better value compared to staying solely within the U.S. market. He specifically mentions China as a strong contender for long-term growth potential.
Kevin Carter, founder and CIO of EMQQ Global, also advocates for investing overseas. His firm oversees the Emerging Markets Internet and India Internet ETFs, which focus on internet and e-commerce companies in emerging markets. Despite the India Internet ETF experiencing a 3% decline this year, Carter remains optimistic about the country’s prospects.
India’s NSE Nifty 50 index has outperformed U.S. markets over the past five years, surging by 118%. Carter attributes this growth to India’s large population, favorable demographics, and rapid economic expansion. He draws parallels between India’s current situation and China’s growth trajectory over the last two decades.
According to IMF data, India’s GDP is projected to grow by 6.2% in 2025, positioning it as one of the fastest-growing major economies globally. This year, India surpassed Japan to become the world’s fourth-largest economy, showcasing its increasing significance on the global stage.
In conclusion, diversifying into international markets may present lucrative opportunities for investors seeking to expand their portfolios beyond domestic holdings. With emerging markets like China and India showing strong growth potential, now could be an opportune time to consider overseas investments.
