First gold, now global stocks: have Indian investors forgotten the risks?

The timing also raises an important question. Last year, investors rotated money out of Indian equities, into gold and silver. Is the next big portfolio pivot from Indian equities to global stocks?

Spot gold prices jumped 75% in 2025 but are up merely 6% in 2026 so far. In 2025, gold ETFs saw a 282% jump in net inflows at ₹42,961.46 crore.

“It is the same behavioural pattern wearing different clothes,” said Nilesh Shah, managing director, Kotak Mahindra AMC. “Last year the narrative was 'uncertainty and inflation → gold/silver' and this year it is 'growth and AI → US and global equities'. Both are driven by recent performance and fear of missing out.”

Market experts said while the opportunity to diversify globally is real, so are the risks, particularly because no one can accurately predict when a popular investment theme could turn into a bubble.

The Indian mutual fund industry's average AUM between April and June 2026 increased by more than 15% from the previous quarter's average AUM, according to Amfi data.

FOMO trade

Shankar Sharma, founder of GQuant Investech, points to the ongoing enthusiasm around memory-chip companies as an example.

He said the memory-chip industry had been "an absolute dog industry" and a pure commodity business for decades. Yet today, investors increasingly believe companies such as Micron represent a one-way opportunity to generate wealth.

"But how many people today know this history and the real intricacies of these industries?" Sharma said.

The history of Micron is extremely sobering, he said, adding that the same is true for Samsung, Hynix and even Taiwan Semiconductor, which was a lagging stock for two decades.

For Shah, this is exactly why wealth managers should play the role of a voice of caution. "Not because global investing is wrong, but because the story driving flows can detach from fundamentals faster than we expect."

The current narrative—that US exceptionalism and AI will deliver superior growth indefinitely—is powerful, much like the internet boom of 1999-2000 or the decoupling narrative before the global financial crisis. Narratives turn into bubbles when too much capital chases too little fundamental earnings growth, Shah said.

Even Shravan Sreenivasula, executive director and head of investment solutions at Avendus Wealth Management, believes global investing has become "a bit too hyped".

At this stage, his advice to HNI and UHNI clients is to wait and increase exposure to India rather than raise allocations overseas.

According to him, interest in global investing has accelerated over the past year because of the rupee's depreciation, growing appreciation of diversification, and newer investment routes such as GIFT City-based outbound funds in addition to the Liberalised Remittance Scheme (LRS).

Diversification myth

Wealth managers caution that diversification only works if investors are genuinely adding different sources of risk and return—not buying more of what they already own.

There is a perception that global investing automatically reduces portfolio risk.

Diversification only reduces risk when the new exposure is fundamentally different from what you already hold, essentially filling a gap, said Swarup Anand Mohanty, vice-chairman and chief executive officer of Mirae Asset Investment Managers (India).

“But if you are investing in the same kind of stocks in both markets, which are driven by the same fundamentals and news cycle, it could backfire,” Mohanty added.

For instance, an Indian investor heavily exposed to pharmaceutical companies earning a significant portion of revenues from the US may not gain much additional diversification by buying American pharmaceutical stocks, he said. The same applies to technology companies in India and the US.

Viram Shah, founder and chief executive officer of Vested Finance, echoed a similar view. "The catch is that it only helps when you're adding something different from what you already own."

Hidden risks

Growing interest in overseas markets is natural, driven by the need for geographical, business and valuation diversification, said Kotak AMC's Shah. But he argues that the risks are not new—they simply feel different in the current environment.

Currency risk, as the rupee may not necessarily depreciate 5-10% as many investors expect; valuation and concentration risk, with global exposure increasingly resembling a bet on a handful of US tech giants; geopolitical and policy risks, including tariffs, trade wars and elections; and regulatory complexity for Indian investors, where LRS limits, Schedule FA reporting, Black Money Act implications and tax compliance where “one missed disclosure can create more pain than a 10% market correction,” he explained.

Currency trap

Currency movements remain one of the least understood risks for Indian investors, according to Viram Shah of Vested Finance.

The rupee has weakened from around 90 to the US dollar at the start of the year to roughly 95.5 now. As a result, part of this year's returns from US equities has come from currency gains rather than company performance, he said.

The rupee has depreciated 12% in past one year.

But that tailwind can easily reverse.

“So what I am saying is it's not a reason to avoid global investing, just a variable to plan for rather than discover later.”

For Sharma, the biggest risk is that investors underestimate how complex global investing really is.

"Global markets are a giant melting pot of stock prices, valuations, momentum, interest rates, currency rates and bond market rates. Then you throw in geopolitics and local politics."

“When things are going easy, you think you have it all figured out. And that is exactly when global investing will get you, because it is definitely not simple and it is definitely not easy.”