Chennai: Year 2021 could well be when Indian retail investors truly came of age as they ventured into Wall Street in record numbers, besides getting active on Dalal Street.
With the US markets enjoying one of their best years in 2021 (S&P 500 gained over 27% in 2021), investments by Indians in US stock markets more than doubled with Indians investing to the tune of $300-500 million across top wealth management platforms.
From wishing to diversify geographically to hedge against a depreciating rupee and saving up for aspirations such as foreign education or travel, Indians have put their money on stocks like Tesla and the popular FAANG (Facebook, Amazon, Apple, Netflix and Google) in the year.
Emergence of tech startups that simplify the logistics involved in global investing has also helped. These startups provide more information and research on global markets, facilitate quick account openings, and seamless and less expensive remittances thus encouraging Indians to explore international markets.
Data from global investing platform Stockal shows Indian investment into the US grew more than 200% in 2021 over 2020. “While transacting investors grew more than almost 250%, volumes doubled and grew from $250 million in 2020 to close to $500 million in 2021 on Stockal among Indians,” Sitashwa Srivastava, co-founder, Stockal, said.
Majority of these investors show a great deal of maturity, he adds, citing that, on Stockal, about 70% of the users trade once or twice in six months, and park funds in curated portfolios managed by global asset managers.Vested Finance, a US SEC-registered online investment platform, saw close to 800,000 new signups on its platform with investors placing more than 450,000 trades throughout the year with trading volumes crossing $250 million. “In 2021, Indians invested double of their 2020 investments (in US stocks),” Viram Shah, co-founder and CEO, Vested Finance, said. Shah added that the users are typically investing for the long term to build their wealth via global companies.
On Kristal.AI’s digital-first private wealth platform, more than 1,600 new accounts were opened in 2021 — almost 10X of what they saw in 2020. Asheesh Chanda, co-founder and CEO, Kristal.AI, estimates that there has been over 50% growth in the industry (global investing) overall. Among others, the key drivers include access to high alpha investment options like pre-IPOs and alternative funds, he adds.
Currently, even as US stock markets go through a correction phase, Stockal’s Srivastava says though some people are booking profits, many Indians are making fresh investments because stocks are cheaper and the dollar has also weakened.