Looking for portfolio diversification? Here are some great investment ideas for US stock market

The leading US stock market indices seem unrelenting to give up the gains anytime soon. The S&P 500, Nasdaq Composite index and Nasdaq 100 are some of the front line indices already trading at their all-time high levels. Of late, President Donald Trump has signed the pandemic relief bill which will further send positive sentiments to the market observers. Although the valuations of some US stocks have reached high levels, the rising consumer confidence and better economic parameters, including corporate earnings, could throw some more positive surprises to the investors.

Going into 2021, with the US FED sending promising signals in support of economic activities, there could be several new opportunities for the investors. The good news is that such investing opportunities in the US stock market are also available to Indian investors. The US stock market presents some of the best investment ideas especially to Indian investors who want to diversify their portfolio across geographies.

From investing in individual US stocks to buying ETF units, there are numerous investment ideas for an Indian investor in the US stock market.There are five leading US indices such as Dow Jones Industrial Average (DJI), Nasdaq-100 Index (NDX), Nasdaq Composite Index , S&P 500 index, and RUSSEL 2000 index. As an investor one may want to stick to them through ETF or pick individual stocks from them. “For first-time investors, investing via ETFs is safer than individual stocks. That being said, some popular companies are MegaCap stocks like Amazon, Google, Apple, Microsoft and more which are always crowd favorites,” says Sitashwa Founder and CEO, Stockal, an international investing platform.

No wonder these top US stocks have generated huge wealth for the investors. Till date in 2020, Amazon, Google, Apple, Microsoft have delivered 71 per cent, 30 per cent, 81 per cent, 42 per cent, respectively. Any fall in the prices of these blue-chip US stocks may be used as an opportunity to accumulate for long-term investing.

But, with several thousands stocks and booming sectors in the US economy, what should be the approach of an Indian investor who wants to invest in the US stocks for the first time? “For an Indian investor, the best way to think of the US markets is to think in terms of portfolio diversification and access to sectors and themes that India does not provide. For example, investing in technology companies is better in the US than in India. Similarly, the US is great for investing in energy, electric vehicles, healthcare and pharma. Some of these themes will move the world forward and are great long-term bets,” says Sitashwa.

So, if you are looking to bring the best out of the US economy into your investment portfolio, here’s a better deal. You may invest in the ‘SPDR S&P 500 ETF’ which is an ETF that tracks the S&P 500 index – an index of a diversified group of large cap US companies across eleven major industries. This ETF gives you an opportunity to invest in all of the S&P 500 stocks/industries in one single-go and through a single investment. The SPDR S&P 500 ETF, popularly known as SPY, is up by nearly 16 per cent this year.

It is very simple and easy for the investors to invest in ETFs or in individual US stocks. What you need is merely a US trading account to reap the benefits of investing in global markets. Begin 2021 by bringing in the element of global diversification with the potential of high risk-adjusted returns to your portfolio.