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Indian portfolios are still mostly Indian. About 95% of HENRY equity exposure sits in domestic stocks. Some is intentional. Most is just default.
The question of how much US or global exposure you should hold isn’t a moral one. It’s about diversification, currency, and the specific quality of returns you want.
Why global exposure matters at all
The Indian market is concentrated in financials, IT, energy, and consumer staples. The US market gives you something India can’t, large exposure to global tech, biotech, healthcare, and innovation-led businesses with global revenue. China gives you exposure to the world’s second-largest economy, often at attractive valuations. These aren’t replications of Indian sectors. They’re genuinely different.
The currency angle most miss
When the rupee weakens, your global investments rise in rupee terms even if the underlying didn’t move. This was visible in 2025 when US tech was flat in dollars but US-tech mutual funds in India returned 8% just from currency. Conversely, when the rupee strengthens, your global investments lose ground. So international exposure is also a currency hedge or currency bet, depending on direction.
For a country like India, where structural rupee weakening is the long-term trend, holding some global exposure is like buying insurance against your home currency.
Tax implications that change the math
Indian mutual funds investing in international equity are taxed as debt funds, not equity. That means LTCG kicks in at 24 months, not 12, and is taxed at your slab rate, not 12.5%. This bites into returns meaningfully.
Direct international investing through LRS (Liberalised Remittance Scheme) avoids this issue but adds compliance complexity. ETFs listed on Indian exchanges that hold international stocks fall in the middle.
The 5 to 15% sweet spot, and why
For most Indian HENRYs, an international allocation of 5 to 15% of your equity portfolio adds genuine diversification without overcomplicating things.
Below 5% is too small to matter.
Above 15% means you’re taking a meaningful currency view that requires conviction.
Within that range, weight tilts based on your view. If you want pure diversification, 8 to 10% is comfortable. If you want a stronger currency hedge, lean to 12 to 15%.
How to add it without overcomplicating
Pick one international fund or ETF and start. Don’t build a global portfolio with five funds. A single broad-market US index fund or a Nasdaq-tracking fund covers most of what HENRYs need. Add over 6 to 12 months through SIPs to average entry.
The point of international exposure isn’t to chase returns. It’s to give your portfolio a different shape. Indian markets and US markets don’t move in lockstep. When one zigs, the other often zags. That’s the actual benefit, and it shows up most in the years when Indian equity has its rough patches.
A portfolio entirely tied to one country is harder to defend than a portfolio with a small but real global tilt.
