NASDAQ (National Association of Securities Dealers Automated Quotations) is an American stock exchange. It is the second largest exchange in the world by market capitalization, behind the NYSE (New York Stock Exchange).
For Indian investors, investing in NASDAQ can be a smart way to diversify their portfolio and get exposure to some of the world’s most innovative companies. However, before investing in the NASDAQ, there are a few things that Indian investors should be aware of.
On that note, here is a detailed look at NASDAQ and the methods Indian investors can use to invest in it.
What is NASDAQ?
NASDAQ consists of more than 3,000 publicly traded companies. Founded in 1971, it is also the first-ever electronic stock market in the world. The NASDAQ sells shares in different types of companies – including consumer durables and nondurables, capital goods, healthcare, energy, finance, technology, public utilities, and transportation. Because NASDAQ is home to some of the world’s biggest and most well-known companies, these funds tend to be very stable and offer investors consistent growth.
It consists of the following indices:
- NASDAQ Composite
- NASDAQ 100
- NASDAQ Financial-100
How can Indian investors invest in the NASDAQ fund?
An Indian investor can invest in a NASDAQ fund in two ways:
This can be done by opening an overseas trading account through any domestic broker having tie-ups with US stockbrokers. The broker will act as an intermediary and execute trades on behalf of the investor. To open the account, you may have to submit certain documents. However, this facility may have some restrictions based on the brokerage firm, such as restrictions on certain investment options or the maximum number of trades allowed, etc. Additionally, the cost of investing can be high when considering brokerage and currency conversion charges. So, research all the costs involved before you open an account.
You can also open a trading account overseas with a foreign broker. However, there may be a risk of currency conversion charges, high brokerage fees, and high minimum balance requirements. It is advisable to research and get things clear upfront before opening a trading account overseas.
You can invest in mutual funds focused on the NASDAQ index through several mutual fund houses. Based on their financial status, Investors can make a one-time lump sum investment or set up a SIP (systematic investment plan) to invest regularly.
Another simplest way to invest in a NASDAQ fund is through Exchange-Traded Funds (ETFs). ETFs are baskets of securities that track a particular index, and they can be purchased and sold just like any other stock. They can be bought directly through domestic or international brokers. There are also Indian ETFs that track major global indices, such as the NASDAQ.
Steps to open a Demat account
Note that you need to open a Demat account to get started by investing overseas. Here’s how to do it.
1. Open a Demat account with a SEBI-registered broker.
2. Provide basic details like name, age, and address and complete the KYC formalities.
3. Add your bank details.
3. Upload your documents in scanned format. Digitally sign your documents with e-Signature.
4. Post verification, your Demat account will be opened, and you can use the platform to buy stocks. You can hold these stocks in your Demat account for as long as you want and sell them when you want to book profits or cut losses.
Indian investors can now invest in international stock exchanges – NASDAQ through mutual funds investment, ETFs, and opening an overseas trading account. However, as with any investment, it is important to research and chooses a broker you can trust. If you don’t have time to analyze stocks, you can always opt for ETFs that expose you to a basket of stocks.