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BW Businessworld

Get The World In Your Wallet

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Even though individual indian investors are allowed to invest $200,000 (Rs 96 lakh) every year in foreign stocks or real estate, very few have actually done so. Investing in global markets requires money of the kind that only the very rich have at their disposal. If you belong to that tribe, it will be useful to keep a decent proportion of your investible surplus aside for tapping such opportunities. And the place to look at this year is Asia.

Global analysts believe Asia offers better opportunity this year than the US, the UK and Japan. The Organization for Economic Cooperation and Development (OECD), which has 30 industrialised countries as its members, has forecasted that the GDP of China, India and Brazil will grow 9.3 per cent, 7.2 per cent and 4 per cent respectively in 2010, and the US would grow only by 0.5 per cent. According to data from Emerging Portfolio Fund Research, global equity investors invested a record $26.5 billion in the April-June quarter in emerging markets. And our punt is on Asia. Within Asia, the best bets are China, Taiwan and South Korea.

 In China, there is no one sector that will pay off unusually more than others. A diversified exposure would be fine. Taiwan's index is dominated by technology companies. So buying a Taiwanese index fund or a fund that invests in the technology companies directly would be the best bet. South Korea offers a varied bouquet — telecom, infrastructure and consumer goods.

There are two ways you can take exposure to global markets. A few domestic mutual funds such as Birla Sun Life, ICICI Prudential, Principal and Franklin Templeton have schemes that invest in equities globally. Some of them are more specific with regard to country choice such as JP Morgan's newest launch, a Greater China Fund that aims to invest in companies in China, Hong Kong and Taiwan.

Alternatively, you could use internet-based overseas trading platforms that provide you access to NYSE-Euronext and London Stock Exchange. In these two markets, there are many exchange traded funds (ETFs) that aim to mimic equity indices of the US, Europe and Asia by investing in the index components. To get a China or a Taiwan exposure, or a fuller Asia exposure, you can invest in an Asia-ex Japan ETF or a country-specific ETF. Some domestic brokerage firms such as ICICI Securities, Reliance Money, Kotak Securities and India Infoline offer retail investors access to overseas trading platforms through tie-ups with international broking firms.

If you are still eyeing the US, you could put your money into a global ETF with a focus on alternative energy, which is being given a major thrust by the Barack Obama administration. With property prices tumbling around the world, real estate in Asia and the US appear equally attractive. You could invest a small amount in real estate income trusts (REITs) that are listed and traded on the same international exchanges where you would buy the international ETFs or stocks.

There are several Asia-related REITs listed on the Singapore Exchange and several US and global REITs listed on the US exchanges. Some real estate mutual funds, such as Schwab Global Real Estate Fund, invest across countries and continents.

rajesh dot gajra at abp dot in

(This story was published in Businessworld Issue Dated 27-07-2009)