First gold, now global stocks: have Indian investors forgotten the risks?
AI Summary
Indian investors are increasingly shifting their focus to global equities, with assets in India-domiciled funds dedicated to these investments rising significantly over the past five years. While this trend is driven by strong performances in US tech stocks and a growing interest in AI, experts caution that the potential for bubbles exists, as past performance may not guarantee future results. Investors should remain vigilant and consider the risks associated with this pivot from domestic to global markets.
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Indian investors are pouring more money into global equities as overseas investing becomes increasingly mainstream. While the opportunity is real, so are the risks, especially since no one can accurately predict when a popular investment theme could morph into a bubble.
Assets under management of India-domiciled funds invested exclusively in global equities, with no domestic exposure, have surged more than six-fold in five years, from ₹15,955 crore in December 2020 to ₹98,182 crore by the end of May 2026, according to Morningstar Investment Research India. The figure stood at ₹48,827 crore in December 2023 and ₹75,179 crore by December 2025.
The surge comes amid a rally in US tech stocks, enthusiasm around AI, and growing awareness among Indian investors of the benefits of geographical diversification. Nifty 50 has fallen 4% in the past year, versus an over 26% gain for the NASDAQ Composite.
The timing also raises an important question. Last year, investors rotated money out of Indian equities, into gold and silver. Is the next big portfolio pivot from Indian equities to global stocks?
Spot gold prices jumped 75% in 2025 but are up merely 6% in 2026 so far. In 2025, gold ETFs saw a 282% jump in net inflows at ₹42,961.46 crore.
“It is the same behavioural pattern wearing different clothes,” said Nilesh Shah, managing director, Kotak Mahindra AMC. “Last year the narrative was 'uncertainty and inflation → gold/silver' and this year it is 'growth and AI → US and global equities'. Both are driven by recent performance and fear of missing out.”
Market experts said while the opportunity to diversify globally is real, so are the risks, particularly because no one can accurately predict when a popular investment theme could turn into a bubble.
The Indian mutual fund industry's average AUM between April and June 2026 increased by more than 15% from the previous quarter's average AUM, according to Amfi data.
Shankar Sharma, founder of GQuant Investech, points to the ongoing enthusiasm around memory-chip companies as an example.
He said the memory-chip industry had been "an absolute dog industry" and a pure commodity business for decades. Yet today, investors increasingly believe companies such as Micron represent a one-way opportunity to generate wealth.
"But how many people today know this history and the real intricacies of these industries?" Sharma said.
The history of Micron is extremely sobering, he said, adding that the same is true for Samsung, Hynix and even Taiwan Semiconductor, which was a lagging stock for two decades.
For Shah, this is exactly why wealth managers should play the role of a voice of caution. "Not because global investing is wrong, but because the story driving flows can detach from fundamentals faster than we expect."
The current narrative—that US exceptionalism and AI will deliver superior growth indefinitely—is powerful, much like the internet boom of 1999-2000 or the decoupling narrative before the global financial crisis. Narratives turn into bubbles when too much capital chases too little fundamental earnings growth, Shah said.
Even Shravan Sreenivasula, executive director and head of investment solutions at Avendus Wealth Management, believes global investing has become "a bit too hyped".
At this stage, his advice to HNI and UHNI clients is to wait and increase exposure to India rather than raise allocations overseas.
According to him, interest in global investing has accelerated over the past year because of the rupee's depreciation, growing appreciation of diversification, and newer investment routes such as GIFT City-based outbound funds in addition to the Liberalised Remittance Scheme (LRS).
Wealth managers caution that diversification only works if investors are genuinely adding different sources of risk and return—not buying more of what they already own.
There is a perception that global inve...
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