Looking at investing in US stocks? Think beyond FAANG, Twitter and Tesla

While Facebook, Amazon, Apple, Netflix and Google – together popularly known as FAANG – have been favourites of most Indians investing in US stocks, there are themes beyond technology that are catching up now, according to global investing firm Winvesta. “Beyond FAANG, Twitter and Tesla, there is a lot of interest in themes such as electric vehicles (EVs), pharmaceuticals and remote working,” said Swastik Nigam, founder and chief executive of Winvesta. Data available with the firm suggests that Chinese EV firms like NIO and Xpeng that are listed in the US are popular stocks among Indians, despite Tesla being in the same category.

Some of the other stocks that Nigam mentioned included Pfizer and Moderna from the pharma space, given their Covid-19 vaccine relevance. He also said that remote working tools like project management service Asana and collaboration application Zoom have been ranking well too among Indians investing abroad.

Investing in US stocks – Direct or Mutual Funds?

As many as 38 international mutual funds are being offered in India at present, with ten of these launched in the last one year alone. The trend shows an increasing appetite for Indians seeking global exposure in their portfolio. Asset management companies are creating these products in India using feeder funds or Fund of Funds (FoF) that participate in an existing global fund or ETF.

While more complex than mutual funds, buying US securities directly has certain advantages for an investor. “You get exposure to global IPOs, intraday trading and the option of holding just those stocks that you desire instead of a basket created by someone else,” Nigam said.

Is global investing only for the rich?

Global investing is more expensive than investing in Indian stocks given the remittance and repatriation costs involved for Indians who do not have a US bank account. Banks charge a fixed fee from Rs 100 to up to Rs 2000 and an added variable fee for each transaction. Holding a multi currency account may offset some of these frequent charges.

However, fractional ownership if permitted in US stocks. This implies that with as little as even ten rupees, an investor can but a fraction of a popular US stock.

“On average, our customers’ accounts are at $ 4000 levels, but that is because the averages shoot up with some HNIs. But most of the account holders hover between $ 10 to $ 600 levels, which are enabling them to buy even expensive stocks like Amazon that trades at $ 3500 per share, fractionally,” Nigam said.