Do Your Favourite Brands Make It To Your Investment Portfolio?
2 minutes read
“I knew this company is going to do well. I have loved it since the day I started using it!.” You have probably heard yourself say this a few times. As a consumer, you often get early insights and unbiased views on the brands you use. You know what the company is doing right and how the experience delights or displeases you.
However, when it comes to making investment decisions on these strong internal signals, you likely have not been able to exploit it well enough. You are not alone.
Part of the problem is more systematic than we realise. Most of India’s largest publicly traded companies are not pure consumer brands. Think of companies like IOC, SBI, and L&T. While we may be using their products or services indirectly, we don’t have a strong brand affinity for them.
On the contrary, some of the most loved consumer brands in India are not listed in India.
India’s two largest and loved e-commerce companies – Amazon and Flipkart (Walmart) are listed in the US. While e-commerce has become an integral part of our lives, we have not been able to participate in their phenomenal growth stories. Amazon stock has given a 550% return in the last five years (Data Source: Yahoo Finance).
Then there are tech brands like Facebook (Instagram, Whatsapp), Google (Youtube, Gmail, Search), Apple, and Netflix that you can’t get enough of. Indians spend over 4 hours every day on smartphones on average. Most of that time is spent on social media, video streaming, and email, which are dominated by foreign brands. We spend over 15 percent of our time on these brands but hold none of their stock.
Global fashion brands of the likes of Zara, Lululemon, H&M, and Nike have become our favourites over time. Many of the premium cosmetic brands in India are owned by Estée Lauder (MAC, Bobbi Brown, Smashbox), which is listed in the US.
There are aspirational brands that we admire. Even though they may not be present in India, we feel strongly about their growth story. Tesla is a well-known brand in India without having sold a single car in the country. We feel strongly about sustainable brands that help reduce climate change, but ETFs like ICLN (iShares Global Clean Energy) that track such companies are listed outside India.
Investing In International Brands
Although RBI has allowed overseas investments for over 15 years now, investing overseas was not straightforward until recently. The limited channels that offered to invest in the US markets were expensive, complicated, and required high minimum investment. In essence, they were limited to the wealthy or sophisticated investors.
A mix of recent developments changed this. Technology and regulatory advancements now allow you to sign up and open a US investment account in minutes. All from the comfort of your couch.
Fractional investing in US stocks now allows you to buy part of a share rather than the whole share. That means one can buy 1 percent of one Amazon share for Rs 2,000 or so rather than investing Rs 2 Lakh+ on a single stock.
You can thus build a diversified portfolio picking up your favourite brands without a minimum investment size that would otherwise be needed.
Investing in global brands that you are confident will grow can even help you plan your international expenses. If you are looking for overseas education for your child, or travel frequently, you are aware of the depreciating INR against foreign currencies. Your global investments help you mitigate that risk and save smartly for such goals.
As a consumer, you often get the first insights into a product. It’s time to turn those strong views into investment actions. Investing in your favourite brands and being part of their growth story is no more restricted geographically. You can open a US brokerage account digitally in minutes, and start building your dream portfolio today.
This article was originally published in Femina on 3 Jul, 2020
Contributed by Swastik Nigam
He is the Founder & CEO of Winvesta. Before Winvesta, he was a Director at Deutsche Bank where he ran a multi-billion EUR global trading book