Foreign Stocks – Definition, Investment Process, Benefits & more

While minimizing the risk of investment through diversification, the Foreign Stocks are the means to expansion of possible investment options across the globe, not limited to the specific boundaries of a nation.

Diversification is the essence of investment, and investors aim at creating the best portfolio which would yield maximum returns.

While the asset classes in one economy are vast, there are as well geographical entries to the class of assets.

Participation in overseas investment is frequently encountered as the awareness of How to invest in Foreign Stocks is increasing.

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What are Foreign Stocks?

Foreign StocksStocks of company belonging to a geographical boundary are generally known of, to all the residents of the particular country. The Foreign Stocks however, are the securities of companies located outside one particular nature.

Giant companies which not based out from India are a profitable investment option, just like the blue chip companies of India are considered to be.

However, residing from another nature, the companies are listed in the Foreign Stock Markets, which is an entirely different phenomenon.

Notable companies and the product we use, often grasp our attention, and the idea of investing with them may as well arise.

Participating in foreign stock investment as well is a great way of diversifying and creating a strong portfolio, in terms of healthy and increased returns.


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How to invest in Foreign Stocks?

The idea might have been emerged, where the products of the foreign brands you buy may be have attracted your interest to invest in.

Fair enough, for the giant companies they are, but the real challenge is of knowing how to invest in Foreign Stocks. Making it easy for you, we have incorporated this article, which is directed towards How to Buy Foreign Stocks.

  • Choose a broker based in India, but have links with foreign brokers. Among all the reputed and high class performing Indian Stock Brokers have direct links and tie with respective foreign brokers. An overseas trading account of such domain can be opened and operated easily, thereby having the means to invest in foreign stocks.
  • There is also a list of foreign brokers, who let Indian Traders invest in their stock markets. An account can be directly opened by them, making it easy to undertake direct investments in foreign exchanges. Some of the highly active brokers, also have their offices in parts of India, making it easy for the investors to visit them, seeking out for clarification of their query.
  • Some Indian Mutual funds and ETFs are as well-structured to invest in the foreign markets. So, investors can invest in such funds, where their investment goes directly to the foreign equities.

Why Invest in Foreign Stocks?

There are a host of reasons to Invest in Foreign Stocks. Also, the ease with which one can Buy Foreign Stocks, the other reasons are as follows:

  1. There are brands we come across everything, we literally have grown up and evolved using the products of such companies. Some of the brands each and everyone would agree with are Apple, Google, Twitter, Facebook, Amazon, and lots of other companies. The products and services they provide are remarkable, and alongside buying their products, owning a part of the company is highly aspired.
  2. Diversification is all about elimination of risk factors. While we have all the possible ways of efficient diversification in our economy, when a collective factor leads to the downfall of Indian Markets as whole, the risk shall be equally diversified to the as economical factors of one nation does not affect others.
  3. International markets are the hub of greater investment opportunity. Ones you break past the geographical investment boundaries, you will open new opportunities of earning high returns.

What are the good investment instruments for Foreign Investment?

We suggest the best way to Foreign Investment, is the pathway of ETFs and Mutual Funds. ETFs, also known as exchange trade funds, have bunches of international stocks and bonds, creating a common and easy ground to invest in foreign markets.

This way, diversification would be a factor of investment, alongside the nature of high quality foreign investment. Portfolio would expand and returns would become more definite.

However, there are a number of options the investors can choose from and they are as follows.

  • Investment across different nations is possible through international funds.
  • Regional investment is as well facilitated through the Regional Funds, through which one can invest in regions like Europe, Asia, Middle East, etc.
  • Country wise investment is facilitated through country funds.
  • Sector investment is as well facilitated, where one can invest in sectors like gold, energy etc throughout a vast number of countries.
  • ADRs and GDRs

Most Preferred Foreign Stocks for Indian Investors

Some of the best Foreign Stocks to deposit in are:

  • Teva Pharmaceutical Industries Ltd. (TEVJF)
  • Alibaba Group Holdings Ltd. (BABA)
  • Vale SA (VALE)
  • Orascom Investment Holding SAE (OSCMY)
  • Xunlei Ltd. (XNET)
  • PetroleoBrasiliero SA (PBR)
  • Apple
  • Samsung
  • Google

Most Preferred Foreign Stock Markets for Indian Investors

Some of the popular Foreign Stock Markets and Foreign Stock Exchanges are listed below, which are considered favourable and highly profitable for the Indian invetors.

  • New York Stock Exchange
  • Nasdaq
  • Japan ExchangeGroup
  • Shanghai Stock Exchange
  • Hong Kong Stock Exchange

Foreign Stocks or Foreign Stock Market – Conclusion

Diversification and elimination of risk can be done through investment in Foreign Stocks, which can be the takeaway from this article.

But, a lot more study needs to be conducted in order to successfully invest in Foreign Stock Markets and earn a significant return, on each of the investment made.


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