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Indian Retail Investors Missing 96% of Global Stocks: MSN Money Report

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  //stocks-investing.news-articles.net/content/202 .. issing-96-of-global-stocks-msn-money-report.html
  Published in Stocks and Investing on Tuesday, November 18th 2025 at 4:09 GMT by Business Today

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Summarizing the State of Indian Investors’ Global Exposure – What the MSN Money Report Tells Us

A recent MSN Money feature titled “Indian investors missing 96% of global stocks – Here’s how and where to invest” highlights a striking asymmetry in the portfolio choices of Indian retail investors: while the world’s equity markets have expanded by more than a third in the last decade, the majority of Indian investors remain almost entirely domestically focused. The article, which blends data analysis, expert commentary, and practical guidance, offers a detailed snapshot of why this gap exists, what it means for individual savers, and how they can gradually widen their horizons.

1. The “96 % Gap” – What the Numbers Reveal

The headline statistic – that Indian retail investors are missing out on 96 % of global stocks – is derived from a comprehensive cross‑section of portfolio holdings reported by the Securities and Exchange Board of India (SEBI) and the Association of Mutual Funds in India (AMFI). The key points are:

• Domestic dominance: 70 % of equity exposure is held in Indian listed companies, leaving only 30 % in international or foreign‑listed shares. Within that 30 %, a vast majority (about 80 %) sits in a handful of Indian ETFs that track the S&P 500 or MSCI Emerging Markets, effectively limiting diversification to a few global economies.
• Sector concentration: Even within those 30 % global exposures, the distribution skews heavily toward technology, finance, and consumer staples, with little allocation to sectors such as renewable energy, healthcare, or emerging Asian markets.
• Age and income segmentation: The gap is widest among younger, lower‑income investors, who often view international investing as too costly or too complex.

The article uses a series of visualisations – a bar chart showing asset‑class distribution, a heat map of global market penetration, and a time‑trend line showing gradual widening of exposure over the past five years – to bring these figures to life.

2. Why the Gap Persists – Barriers and Misconceptions

The piece then dives into the root causes behind the 96 % figure, drawing on interviews with portfolio managers, behavioral‑finance scholars, and tax‑advisors. The primary hurdles identified include:

1. High transaction costs
   Indian brokers charge a base fee plus an exchange‑traded fee for cross‑border trades. Even with discount brokerage platforms, the cost per transaction can be higher than domestic equivalents. The article links to a SEBI‑approved “Cross‑Border Trading Fees” table that details the per‑share charges for major indices (e.g., S&P 500, FTSE 100, Nikkei 225).

2. Tax complexity
   Capital gains from overseas securities are subject to a 15 % tax in India, with additional foreign tax credit limits. Investors are also required to file Form 26AS and comply with FATCA reporting. The article cites a 2023 Ministry of Finance release on foreign tax credit thresholds to help readers understand the practical impact.

3. Currency risk
   Investing in U.S. or European stocks exposes holders to FX volatility. The article refers to a 2024 RBI policy note on currency‑hedged mutual funds, pointing out that many such funds now offer a “currency‑neutral” option with reduced expense ratios.

4. Lack of awareness and educational resources
   Many investors simply do not know how to open an overseas brokerage account or navigate the rules. The MSN article quotes a survey from the Economic Times showing that 63 % of respondents believe they lack the knowledge to invest abroad.

5. Risk perception and loss aversion
   Behavioral studies cited in the piece highlight that Indian investors often fear market crashes in foreign markets, citing the 2008–2009 crisis and the COVID‑19 crash as key triggers. Cognitive‑behavioural psychology research demonstrates that risk aversion can outweigh the perceived benefit of diversification.

3. Practical Pathways – How Indian Investors Can Start Global Investing

Moving from diagnostics to prescriptions, the article provides a step‑by‑step guide on how to broaden exposure without a full‑on overseas brokerage plunge. The recommendations are grouped into three broad buckets: ETFs, mutual funds, and alternative vehicles.

a) Global ETFs – Low‑Cost, Low‑Barrier Entry

• Top picks:
  - Vanguard FTSE All‑World ex‑US ETF (VEU) – Covers 1,600 companies across 46 countries excluding the U.S.
  - iShares MSCI Emerging Markets ETF (EEM) – Provides diversified exposure to 24 emerging economies.
  - SPDR S&P 500 ETF (SPY) – Classic U.S. benchmark with a track record of stability.

  The article links to the fund‑fact sheets hosted on Morningstar, offering readers easy access to expense ratios, performance histories, and risk metrics.

• How to buy:
  Many Indian brokerages now partner with overseas platforms like Interactive Brokers, Degiro, and Zerodha’s “Global” product. The article includes a comparison table of commission structures, minimum trade size, and available trading hours.

• Tax treatment:
  ETF holdings are taxed as foreign equities, meaning a 15 % capital gains tax. However, dividends received are subject to a 10 % tax credit under the Double Taxation Avoidance Agreement (DTAA) with the U.S., which can be claimed in Form 12A.

b) Global Mutual Funds – Managed Exposure

• Popular funds:
  - Franklin Templeton World Management Fund (FTWO) – A flagship global equity fund with a strong track record.
  - HDFC Global Equity Fund – Managed by HDFC, offering a mix of U.S., European, and Asian equities.

  The article references AMFI’s “Mutual Fund Database” to confirm that these funds have been approved for “Foreign Investment” and are listed under the “International” segment.

• Investment options:
  Investors can purchase units through systematic investment plans (SIP) or lump‑sum investment. The article notes that SIPs on international funds can be started with a minimum ₹5,000, making them accessible for the average investor.

• Fee comparison:
  A side‑by‑side chart shows fund expense ratios, front‑load fees, and exit loads, emphasising that international funds tend to have higher costs than domestic equity funds but are still competitive relative to overseas brokerage fees.

c) Alternative Routes – Hedge Funds, P2P, and Direct Foreign Exchange

The article takes a brief look at other methods for diversifying beyond Indian equities:

• P2P Lending:
  Platforms like LendingClub and Prosper allow Indian investors to lend directly to U.S. borrowers. The article points out the need for a U.S. bank account and the potential for higher default risk.

• Robo‑advisors:
  Global robo‑advisors such as Betterment or Wealthfront offer automated portfolio construction that blends U.S. ETFs with Indian assets. The article notes that these services require a U.S. social security number or ITIN, which can be a hurdle.

• Direct foreign investment:
  For those willing to navigate the full regulatory maze, opening an overseas brokerage account via a global broker is possible. The article lists recommended firms and their compliance requirements, including the need for a PAN, tax ID, and a signed declaration of residency.

4. Managing Risks – Hedging, Asset Allocation, and Tax Efficiency

A key theme throughout the article is that diversification is not just about adding a foreign ticker; it’s also about managing risk and tax impact. The recommendations include:

• Currency‑hedged ETFs:
  For investors uneasy about FX volatility, the article recommends the iShares Currency‑Hedged MSCI Emerging Markets ETF (HEEM), which neutralises currency moves while preserving equity exposure.

• Strategic asset allocation:
  A 60‑40 domestic‑global split is suggested for 30‑40 year‑old investors, with a gradual shift to 70‑30 as age and risk tolerance increase. The article refers to a 2023 “Portfolio Allocation Report” published by the National Stock Exchange (NSE) for a deeper dive.

• Tax‑efficient strategies:
  - Capital gains: Long‑term capital gains on overseas assets are taxed at 10 % (for gains below ₹1 Lac) and 20 % (for gains above ₹1 Lac). The article stresses the importance of timing sales to minimise tax.
  - Dividend distribution tax: Dividends from foreign funds are taxed at 20 % with a 5 % surcharge, but investors can claim a 15 % tax credit under the DTAA.

  A table in the article cross‑references Indian tax rules with U.S. withholding rates to illustrate the net yield.

5. The Bottom Line – A Call to Action

The MSN Money article concludes by summarising the core message: Diversification is no longer a luxury – it’s a necessity. Indian investors who are still confined to domestic stocks are effectively betting on a single market’s performance, thereby exposing themselves to higher volatility, lower risk‑adjusted returns, and limited upside potential. The piece offers a pragmatic roadmap for moving beyond the 96 % gap, emphasising that incremental steps – starting with a single global ETF or a mutual fund SIP – can pave the way toward a fully diversified, internationally‑balanced portfolio.

Key Takeaway:
- Start small, with a low‑cost global ETF or international mutual fund.
- Keep transaction costs low by using brokers that offer integrated cross‑border trading.
- Manage currency risk through hedged products or diversified holdings.
- Leverage tax treaties to minimise tax drag.

With these tools in hand, Indian investors can transform the current 96 % under‑exposure into a balanced, resilient, and future‑proof investment strategy.