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A look into how Indians are investing overseas

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MUMBAI: Appetite for international investments by Indians continues to grow with a majority of investors choosing single stocks over exchange-traded (ETFs) as the instrument for exposure to the US markets, according to a report by Winvesta, a fintech firm that allows Indians to invest abroad.

As per the report, ETFs held about 13% share in the overall asset under management (AUM) on Winvesta in the June quarter, which is a substantial increase from the 9% share ETFs had six months ago.

The AUM in ETFs at Winvesta grew 325% in the last six months, while the AUM in stocks has grown by over 185% in the same period. This is despite the sharp rise in interest from traders and younger investors due to meme stock phenomenon in the US.

“ETF investing remains more popular among matured investors, but younger investors are also increasing participation. 65% of the ETF AUM on our platform is held by investors in the 35+ age group. Younger investors are more comfortable picking single stocks, likely because they are closely connected to many brands and hold a deep interest in certain sectors,” the report said.

Notably, less than 0.1% of India’s financial wealth is invested overseas, which is a stark contrast to developed countries where 10-20% of the wealth is diversified internationally.

The report also highlighted that while US investing is synonymous with the popular FAANG (Facebook, Apple, Amazon, Netflix and Google) stocks, today these set makes up only 17% of the total stock investments on Winvesta’s platform.

This ratio trended downwards since the beginning of last year but has remained constant in Q2.

New stocks that caught investor interest in Q2 were AMC Inc, Palantir Technologies Inc, and Coinbase Global Inc. Moreover, GameStop Corp was the third most traded stock on the platform by transaction volume, and the most popular by AUM transacted.

In terms of ETFs, TQQQ (ProShares UltraPro QQQ) ETF, followed by ARKK (ARK Innovation), ARKG (ARK Genomic Revolution), FNGU (Bank of Montreal MicroSectors FANG Index 3X Leveraged), and VTI (Vanguard Total Stock Market Index) were the most popular funds by AUM.

While the US markets remained the mainstay, Winvesta said that the introduction of multi-currency accounts—that allows investors to receive, pay, and hold multiple currencies— has opened up new avenues for Indians to invest such as Europe.

The average account size has also grown from just about $2,000 in the middle of last year, to around $4,700. The average transaction size on the platform is $850, while the median size is far lower at $120.

In terms of demographics, the bulk of the investors on Winvesta are 25-40 years old, making up 60% of the clients on the platform. “We have recently also seen an increase in investors in 18-25 age group who now make up 10% of all our clients,” it said.

Notably, technology, electric vehicle, and blockchain sectors were the most popular sectors by transaction volume during the June quarter.

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