Top 10 stocks that Indian investors buy in US equity market – Investing Abroad News

US stocks rallied hard in 2023 with the momentum set to end the year at a high. Some investors and traders on Wall Street are bracing for more stock gains ahead, marking the start of the ‘Santa Claus rally’ – a seasonal trend in which equities tend to rise in the first few days of the new year. S&P 500, the barometer of US equities is up nearly 25% while Nasdaq 100, the technology-dominated index is floating 50% higher to date in 2023.

Geopolitical tensions are certainly on investors’ thoughts as the year begins, with tensions in the Middle East expected to rise. Treasury yields are sliding as the US Fed may prepare to ease its rate hike campaign next year. The focus for investors will also be on tech stocks as the economy prepares for a ‘higher-for-longer rate regime amidst sticky core inflation.

In an exclusive conversation with Financial Express Online, Viram Shah, CEO and Co-Founder of Vested Finance, gives critical insights on emerging market trends and, in particular, how Indians are diversifying their portfolios by investing abroad.

The Nasdaq is up by over 50% YTD. How has been the investing experience of Indian investors buying tech stocks?

Vested Finance, an online investment platform that enables Indian investors to invest in the US stock markets, saw trading volumes grow by 45% in 2023 as compared to 2022, while buy transactions went up by 40%.

Tesla, Amazon, Apple, Microsoft, Google, Facebook, and Nvidia were the top stocks traded on the platform. While investing in the top tech stocks has been popular, investors have also taken the ETF route to diversify their portfolios and get exposure to the US markets. The Vanguard 500 Index Fund ETF (VOO), which tracks the S&P 500 index, and the Invesco QQ ETF (QQQ), which tracks the Nasdaq-100, are among the top ETFs traded on the platform.

Millennials and NRIs have been one of the key segments of investors that joined our platform. They are seeing the value of investing in US stocks and have actively started tracking global equities and have become global investors. In FY23, overall trade volumes on the platform increased compared to FY22.

Although investors like to invest in technology stocks directly, they want guidance on how to build their portfolios. Hence, over 20% of customers have contributed to the rising interest in ‘Vests’, pre-built investment portfolios provided by Vested Finance.

How popular is the concept of Fractional investing with Indian investors?

We let investors invest in parts of a share, making it easier for small investors to get in on big-name companies. In 2023, we’ve seen a lot more activity from Indian investors. People are mostly investing in big tech companies and also using ETFs to diversify their investments.

Which are the top 5 stocks that Indian investors buy on your platform?

Stocks

1. Tesla
2. Amazon
3. Apple
4. Microsoft
5. Google
6. Nvidia
7. Meta
8. Google
9. AMD
10. Taiwan Semiconductor

ETFs

1. VOO
2. QQQ
3. QQQM
4. TQQQ
5. VGT
6. BITO
7. SQQQ
8. SOXL
9. SCHD
10. ARKK

(Based on Vested Data)

What are the advantages of pre-built portfolios to investors?

At Vested, we also provide Vests or curated portfolios that consist of stocks and ETFs. Vests are constructed with different goals or themes in mind, enabling investors to focus their investments on specific industries and core themes.

How, according to you, should investors prepare themselves ahead of expected Fed rate cuts in 2024?

The Federal Reserve’s indication of further rate hikes could offer a silver lining for Indian investors in the US markets. A higher interest rate typically strengthens the dollar, which translates to increased returns for foreign investors holding dollar-denominated assets. Besides, a firmer stand against inflation fosters a more stable and predictable economic environment, which benefits long-term investments. Consequently, Indian investors with stakes in US markets may find their investments becoming more valuable.

What are some key trends and top holdings that are defining investment strategies in 2024?

If we talk about equity investments in 2024, the investment landscape will be significantly shaped by an interest in technology sectors. Investors are increasingly channelling funds into areas such as artificial intelligence (AI), computer chips, and large technology conglomerates, alongside a notable inclination towards specific exchange-traded funds (ETFs) and innovative companies like Tesla.

This shift not only reflects the evolving dynamics of the investment market but also highlights key trends and top holdings that are defining investment strategies this year. Here’s a closer look at the data: (investment through Vested platform in 2023)
Surge in AI and Chip Company Investments: Investments in AI and chip companies have seen a 45% increase year-over-year, reaching approximately $10 million. This growth is propelled by investor enthusiasm for advanced technologies. Notable companies in this sector include Nvidia, TSMC, UiPath, and ASML.

FAANGM Stocks on the Rise: The big-tech group, FAANGM (Facebook, Apple, Amazon, Netflix, Google, and Microsoft), has also experienced substantial investment growth, with a 35% increase in 2023, amounting to over $40 million. This trend underscores sustained investor confidence in these tech giants.

Tesla’s Growing Popularity: Tesla continues to capture the interest of both new and seasoned investors, with about 10% of active Vested investment accounts holding Tesla shares. Additionally, 12% of new investors from India in the US markets start by investing in Tesla, indicating its global appeal.

Rising Interest in Select ETFs: Despite a general slower growth in ETF investments, some, like QQQM and SQQQ, have seen a significant 300% increase in investments this year, suggesting a strategic shift towards diversified investment options, especially in technology.

Can you elaborate on the expected growth and potential of the P2P Lending, INR Bonds, and Solar investment options you recently introduced?

It’s too early to comment on this. We have just launched P2P lending, and the initial traction is quite positive. INR Bonds and Solar will be launched in the first-half of January 2024. So we feel it will be best to give an growth estimate post the launch.

What are the key differentiating factors and risk-return profiles of the alternative assets compared to traditional investments?

While Alternative Assets can provide decent returns and diversification, some of these assets come with high-risk and uncertain regulations. The two key reasons why we picked these three assets are:

Minimal risk of capital loss

Capital loss can happen due to two reasons: Wrongdoing by the investment product manufacturer or market risk

While market risk is unavoidable, we wanted to minimize product manufacturer risk

For both Bonds and P2P, there is a clear regulatory framework that governs both assets

For Solar, the returns are backed by a physical asset of which the customer is the actual owner, reducing the dependency on the product manufacturer

If needed, one can go and physically verify the installations

Market potential

We are looking at all these asset classes with a 10-year horizon and wanted to offer products that have good market tailwinds.

P2P: Still a nascent market that got regulated in 2017

Bonds: The market for retail investors has just opened up

Solar: India has ambitious targets that the government is pushing towards