Index Fund Corner
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| Scheme Name | 1-Year Return | Invest Now | Fund Category | Expense Ratio |
|---|---|---|---|---|
| Axis Nifty 50 Index Fund | +32.80% | Invest Now | Equity: Large Cap | 0.12% |
| Axis Nifty 100 Index Fund | +38.59% | Invest Now | Equity: Large Cap | 0.21% |
| Axis Nifty Next 50 Index Fund | +71.83% | Invest Now | Equity: Large Cap | 0.25% |
| Axis Nifty 500 Index Fund | — | Invest Now | Equity: Flexi Cap | 0.10% |
| Axis Nifty Midcap 50 Index Fund | +46.03% | Invest Now | Equity: Mid Cap | 0.28% |
How rupee depreciation benefits US-focused investments? As the dollar strengthens, the value of US assets increases when converted back into rupees, providing extra returns.
For example, consider an investor who placed ₹1 lakh in both an Indian stock and a US stock a year ago. If both investments saw a 20% gain, the Indian stock would now be worth ₹1.2 lakh. However, the US stock investment would grow to ₹1.25 lakh, thanks to the dollar’s appreciation.
The additional ₹5,000 gain is purely due to the dollar’s strength—illustrating how currency movements can provide a long-term advantage for Indian investors.
Over the past year, the currency movement has contributed an additional 4-5% to returns. In the past three years, the cumulative impact could be as high as 10-15%, amplifying overall gains from the US stock market.
Nikhil Behl, CEO of Stocks at INDmoney, explains how the depreciation of the rupee has positively impacted returns for Indian investors in US-denominated assets. US-focused mutual funds and stocks, which invest in assets like US stocks and ETFs, benefit when the rupee weakens against the dollar.
“When the rupee depreciates, the value of these foreign holdings rises in rupee terms,” says Behl. This leads to higher returns for Indian investors in US-based assets, even if the US market’s performance remains unchanged.
Will currency movements continue to affect returns?
While currency fluctuations have played a role in boosting returns, Behl suggests that market fundamentals will remain the dominant driver of returns in the future. “Over time, sector dynamics and themes like innovative technology, AI, and energy companies in the US have outperformed benchmark indices,” he adds.
Investors should focus on long-term growth themes and diversify their portfolios to navigate beyond short-term currency shifts.
Hedging or benefiting from the strong dollar?
Given the currency volatility, many Indian investors must be wondering whether they should hedge against the rupee’s depreciation or embrace it as an opportunity. Behl suggests to keep a diversified approach, with US investments offering a natural hedge against the weakening rupee.
