The Nifty 50 and Sensex, the two most important barometers of the Indian stock market, are at record highs. Mutual funds and direct equity market participants must now ensure that any sudden market changes have no negative impact on their portfolio results. Hedging and diversification are two essential instruments that equities market investors use to protect their portfolios against any negative developments in the equity market.
One of the ways to diversify and reduce portfolio risk is to add equity-backed investments from a different geography. Indian equity investors may consider taking exposure in the US stock market. Here’s a comparison between the two big equity markets – The Total Market Capitalization of the Indian Stock Market () is about $5 trillion, while that of the US Stock Market is about $50.8 trillion.
As an Indian investor, one may consider taking US market exposure through exchange-traded funds (ETFs). ETFs in the US stock market offer diversification options for investors, allowing them to make better bets in equity markets across various market capitalizations and sectors. An ETF is a low-cost mutual fund that tracks an index, allowing investors to simultaneously buy all stocks in the same proportion as the index.
ETF popularity is catching up with the investors in . Zerodha Fund House reveals that ETFs now constitute close to 13% of the total Mutual Fund AUM indicating the remarkable adoption of ETFs by retail investors in India.
But for exposure in US Stock Market, here are the 9 ETF options:
The Vanguard Total Stock Market ETF (VTI) offers exposure to the entire US equity market, including growth and value firms, across over 3900 equities, including the Nasdaq 100, Dow 30, Russell 2000, and S&P 500.
The five major industries for VTI are technology, consumer discretionary, industrials, , and financials. Apple Inc., Microsoft Corp., Alphabet, .com Inc., Facebook Inc., Tesla Inc., Berkshire Hathaway Inc., NVIDIA Corp., JPMorgan Chase & Co., and Johnson & Johnson are a few of the top holdings.
The SPDR S&P 500 ETF, also known as the SPY ETF, is an ETF that tracks the S&P 500 index, a group of large-cap US firms in eleven key industries. It is considered the best indicator of large-cap US equities. The top three industries in the S&P 500 are information technology, healthcare, and communications services.
Invesco QQQ Trust (QQQ) is an ETF that offers access to all 100 Nasdaq companies with a single investment, following the Nasdaq 100 Index. QQQ’s top holdings include Apple, Microsoft, Nvidia, Amazon, Meta, and Tesla.
The Dow Jones Industrial Average (DJI), also known as the Dow 30, is a price-weighted index of 30 large-cap US equities. It is unique in that it only includes US-based businesses with an excellent reputation, sustained growth, and interest to a large number of investors. The Dow 30 selection is not governed by quantitative rules or market capitalization.
The iShares Core S&P 500 ETF tracks the investment performance of an index composed of large-capitalization U.S. equities. The benchmark index is S&P 500 Index.Jaipur Investment
Vanguard S&P 500 ETF tracks the S&P 500 Index’s return, representing 500 largest U.S. companies, with an expense ratio of 0.03%, aiming to gauge overall U.S. stock returns.
The Russell 2000 index, comprising 2000 small-cap US stocks, is ideal for investors seeking diversification. The iShares Russell 2000 ETF provides exposure to all Russell 2000 stocks.
Vanguard Growth ETF is an exchange-traded share class of Vanguard Growth Index Fund, tracking the investment performance of the CRSP US Large Cap Growth Index, with an 0.04% expense ratio.Pune Investment
The Dow Jones U.S. Large-Cap Growth Total Stock Market Index ETF aims to track the total return of the index before fees and expenses. Following a 2-for-1 forward share split, the number of outstanding shares increased but decreased the Net Asset Value per share.
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