This report is based on aggregated data from retail investors across India who invest in fractional shares of U.S. equities on the Winvesta platform.
Indians are prolific consumers of global brands. Some of the most recognized brands in India are not listed in the Indian stock market. Till recently, Indian investors were left out of the growth stories of the brands they love and admire. Less than 0.1% of India’s financial wealth is invested overseas, which is a stark contrast to developed countries where 10-20% of the wealth is diversified internationally.
This is changing swiftly. Technological, regulatory, and compliance advances have made it feasible for investors from India to access the US equities market, and invest as little as $1 in any security. And investors are taking advantage of that.
We witnessed tremendous growth in interest in overseas investments in the last year.
We’ve seen the appetite for international investments increase. Themes that aren’t available in India have started becoming more popular. We have seen Indians investing in electric mobility, blockchain, and cryptocurrency firms. We’ve seen an increasing interest in Funds beyond the US, and in themes such as Commodities as well as specialist sectors such as Fintech.
We are seeing Indians invest from all over the country – not just the metros. A majority of the investors are not from the metros.
This report is an objective look at where India invests beyond India.
Where are Indians investing overseas
A majority of investors chose single stocks over ETFs as the instrument for exposure to US markets. ETFs hold about 14 percent share in overall asset under management (AUM) on Winvesta today.
The AUM in ETFs has grown 250 percent in the last six months, while the AUM in stocks has grown by over 400 percent in the same period. The recent spike in interest from traders and younger investors was a factor in a disproportionate rise in the AUM of stocks vs ETFs.
ETF investing is more popular among matured investors. 85 percent of the ETF AUM on our platform is held by investors in the 35+ age group. Younger investors are more comfortable picking single stocks, likely because they are closely connected to many brands and hold a deep interest in certain sectors.
Popular sectors, stocks, and ETFs on Winvesta
Although for many Indian investors, US investing is synonymous with the popular FAANG stocks, today FAANGs make up only 17% of the total stock investments on our platform. This ratio has been trending downwards since the beginning of last year as other high growth stocks like TSLA, NIO, and RIOT took the lead from the tech giants. Apple, Amazon, and Microsoft continue to be among the top 10 popular stocks on the platform.
Technology, EV, and blockchain sectors are the most popular sectors by trading volume.
The most popular ETF on Winvesta by transaction volume is QQQ (Nasdaq 100) ETF, followed by VTI (Vanguard Total Stock Market Index), ARKG (ARK Genomic Revolution), SPY (S&P500), and ARKK (ARK Innovation).
Investors are also taking interest in diversifying in geographies other than the US. Around 10% of the AUM on the platform is invested in geographical ETFs like EWZ (Brazil), and EEM (Emerging Markets), etc., and ADRs (American Depository Receipts) of foreign companies listed on US exchanges, such as Alibaba (BABA).
Many investors have also taken interest in commodity ETFs like SLV (Silver) and GLD (Gold). There is also a growing affinity towards emerging themes like clean energy and fintech which are accessible through ETFs like ICLN and FINX.
How much are Indians investing overseas
Winvesta offers fractional trading for investing in US stocks. This enables investors to buy and sell a fraction of any stock in the US market. One can buy 1% of Amazon stock for around $30 and doesn’t need $3000+ to participate in Amazon’s growth (AMZN stock price around $3100 at the time of writing). Investors get capital gains, dividends, and voting rights proportionate to their holding.
Fractional trading has truly democratized overseas investing for Indians. Investors on our platform are starting with as little as $100 and diversifying it across 10-15 securities.
The average account size on Winvesta has grown from just about $2000 in the middle of last year, to around $5000 today. The average transaction size on the platform is $800, while the median size is far lower at $120.
Due to a modest fixed fee involved in the remittance process, most investors prefer making lump-sum transfers and then invest it over time. However, many clients are remitting repeatedly as systematic or opportunistic investments.
Demography of the Indian Overseas Investors
Winvesta clients are spread across the country, with adults from every age group participating. The bulk of the investors are 25-40 years old, making up 60% of the clients on the platform.
Residents of metros have shown a keen inclination towards overseas investments. Delhi, Mumbai, and Bangalore make up almost 25% of the investor base. However, Tier 2 cities are not far behind and together overshadow the metro cities. With Winvesta’s digital onboarding and KYC, an Indian living anywhere in India can create an account and invest in US stocks.
A majority of investors in overseas markets are male, which echoes the domestic investment trends. Only 6% of clients on Winvesta are women. Even though women dominate the consumption economy, and often take lead in savings planning, their participation in investing lags significantly. This is a challenge that we continue to tackle and are looking to make concerted efforts on. If you have any thoughts or ideas on this, please do write to us.
We realize that the penetration of US stock news in Indian media is very limited. At the same time, it is extremely difficult to find relevant content in international media. Furthermore, it is not contextualized for Indian investors.
Winvesta provides relevant and contextual content on US stock investing to Indian investors. It is simplified and jargon-free but doesn’t omit facts and financial data. Winvesta Crisps is a daily newsletter that summarizes what happened in the US markets on the previous trading day. It is a 2-3 minute read, circulated just before the US markets open. It is free for everyone, and not exclusive to our clients.
We have seen tremendous interest and growth in the readership of Winvesta Crisps. The newsletter reaches more than ten times the number of clients on our platform. The savvy Indian investor is educating herself well before leaping into one of the world’s most popular and liquid asset classes!
You can subscribe to Winvesta Crisps and read more about international investing on the Winvesta blog.