Lots of investors are talking about 15-20 percent allocation towards international equities. As diversification takes off, the Rs 6000-crore sum will increase manifold over the next three to five years.

A minimalist approach to investing may be good, more so when a crisis like the Covid-19 pandemic cause turmoil worldwide. But it isn’t easy, especially for a do-it-yourself mutual fund investor, when a myriad of debt and equity choices are available.

For investors who are looking at entering the stock markets today, investing in index funds makes more sense. Here’s why.

Sectors and themes are becoming more and more popular in the investing universe today than they were a few years ago. With diversified mutual funds being vanilla (boring to a lot of people), sector and themes add an element of appeal to the investing process. Let’s focus on the things to watch out for when investing in these products. But first, let’s understand what they are.

The investment management industry has come a long way over the last three decades. The first mutual fund launched in the late 1980s and today there are not hundreds, but thousands of mutual funds in the industry today.

How does international diversification fit into this? Foreign investments have fallen less and over long periods have very low correlation with Indian equity markets.

More and more Indian investors have begun investing directly in the United States stock markets this year, in the hunt for overseas equities exposure and geographical diversification of portfolios amid a freefall in domestic share markets.

By choosing index funds, investors can ensure low fees while getting exposure to the best companies globally.

A key characteristic of a bubble is that no one thinks it’s a bubble, says Marc Andreessen, a figurehead in Silicon Valley’s venture capital scene when continuously asked in 2011 and 2015 about soaring tech valuations.

Global companies are doing better than ever and the rupee’s depreciation has added a minimum of 3-5% every year to their returns