Investment Diversification: How Adding Global Exposure Can Strengthen Your Portfolio | Markets News

Indian investors can access overseas securities either through mutual funds investing globally or via the Liberalised Remittance Scheme (LRS).

India’s macro indicators have continued to surprise on the upside, with India already becoming the third-largest economy in the world. Meanwhile, global equity markets have reached new highs, with the MSCI All Country World Index hitting a record high recently driven by expectations of a US Federal Reserve rate cut and easing global inflation pressures.

While the domestic story has done well, experts say investors may also consider ‘local plus global’ funds since these can give a diversified approach to investing.

Investing in mutual funds with international exposure provides multiple benefits to investors, the most important one being diversification. When the domestic market faces economic downturns, the overseas market might perform differently, thus balancing the overall portfolio and reducing the volatility.

Diversification

“Diversification is the only free lunch,” said Jyoti Prakash, managing partner (equity) and PMS at AlphaaMoney, citing Nobel laureate Harry Markowitz. She added that “every investor should diversify across geographies and asset classes”.

Across geographies, most investors show a domestic bias, focusing on local equities and bonds. While this worked for India post-COVID, the year 2025 has been a rude awakening. In dollar terms, the MSCI China Index outperformed the MSCI India Index by 36 percentage points in just the first nine months of 2025, Prakash said.

“Indian investors can access overseas securities either through mutual funds investing globally or via the Liberalised Remittance Scheme (LRS). Seeking advice from Registered Investment Advisors is essential to navigate investing beyond India’s shores,” Prakash said.

Exposure To AI, Robotics, Semiconductors, Other Innovative Tech

The ‘local plus global’ approach also allows investors to have an exposure to unique themes such as AI, robotics, semiconductors, and other innovative technology, as these themes are not directly available in the domestic markets.

‘Local Plus Global’ Funds

Investing in mutual funds following the ‘local plus global’ approach is hassle-free and can provide all these benefits in just one fund.

Moreover, international investments can benefit from currency diversification. When the value of the local currency declines, foreign investments denominated in stronger currencies can provide a cushion, potentially leading to higher returns when converted back to the local currency.

Let’s see how some of the funds focusing on both Local Plus Global approach have fared over the years: –

*Direct Plan – Growth Option

The strategic inclusion of mutual funds with both local and international exposure helps investors not only achieve diversification but also tap into growth opportunities across different markets and sectors. This balanced perspective, coupled with the ease of management, makes such funds an attractive option for those seeking to optimise their portfolios while mitigating risks.