By investing across S&P 500, Dow 30 or Nasdaq 100 stocks or buying ETFs linked to them, you can bring diversification to your domestic portfolio.
S&P 500, Dow 30 or Nasdaq 100 are the three leading stock market indices in the US stock market. Investors in India who look for more broad-based and low volatility exposure in US stocks should go for S&P 500, while those who are are more bullish on technology companies may consider investing in Nasdaq. Dow 30, on the other hand, represents stocks dominated by the home grown US companies.
Year-to-date, S&P 500, Dow 30 or Nasdaq 100 are up by almost 27.56 per cent, 18.61 per cent and 28.55 per cent respectively.
By investing across S&P 500, Dow 30 or Nasdaq 100 stocks or buying exchange traded funds (ETFs) linked to them, you can diversify across US stocks and also bring in diversification to your domestic portfolio. By investing in leading US companies, there’s an advantage of global diversification and being on the right side of a INR-USD foreign exchnage equation in one’s portfolio.
From the old-economy stocks and sectors to the new-age companies, S&P 500, Dow 30 and Nasdaq 100 stocks give an Indian investor an opportunity to add some of the best global stocks to one’s portfolio.
US ETFs give you the advantage of diversifying in international stocks and also keep you diversified across various leading themes in the US stock market. From technology growth to value-stocks to large-caps to small caps, the US ETFs are available to keep your portfolio well-diversified.
If you are looking to take exposure in US stock market through ETFs, here are the top 3 US ETFs to start with:
- Popularly known as the SPY ETF, the SPDR S&P 500 ETF is an ETF that tracks the S&P 500 index
- DIA tracks a price-weighted index of 30 large-cap US stocks as represented in the Dow Jones Industrial Average (DJI) or the Dow 30.
- QQQ is an exchange-traded fund that gives you access to Nasdaq 100 companies in a single investment
One can open a US brokerage account with a global stock trading platform and start trading in the US stocks and ETFs from India.
Here’s a primer on S&P 500, Dow 30 and Nasdaq 100 to know more about them before you start investing.
S&P 500 is considered to be the top-most single indicator of large-cap US stocks and includes nearly 500 leading corporates across 11 sectors and covers about 80 per cent of the market capitalization of the US stock exchanges.
The Nasdaq 100 is a large-cap index and includes one of the largest domestic and international non-financial companies listed on the Nasdaq Stock Market based on market capitalization.
Some of the world’s most innovative companies including Apple, Microsoft, Starbucks, Google, Intel, and Tesla are listed on Nasdaq 100.
On the other hand, the Dow Jones consists of top 30 blue-chip companies but unlike some of the leading indices, it represents companies that are only based in the US.
Opening an international trading account is simple and easy from India and helps you to diversify your portfolio across geographies. As an Indian investor looking to invest in the US stocks, the leader stocks of Nasdaq 100 can be a good starting point. Some of the leading stocks in Dow 30 and S&P 500 may also be added for further diversification. A tinge of US stocks or ETFs in your Indian stock portfolio can provide you with more stable returns with adequate diversification across industries, stocks and markets.
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