Once in a while a company comes and changes an entire industry or the way people consume a product or service. Just like Amazon changed the way we shop for our daily needs, Netflix Inc. (NLFX) has changed the way we consume content on television or pretty much any other device. It had the first-mover advantage in the streaming industry, having realized very early that the internet would transform the way people consume video content.
There are several reasons why Netflix is the leader when it comes to streaming services. What works for Netflix is a superior recommendation algorithm that suggests to users what content to watch based on popular shows, the general interest of viewers, and specific shows the user has enjoyed in the past. Netflix tests these algorithms with its users and makes adjustments as it goes along. Also, mining such data helps Netflix understand the kind of content viewers are most likely to watch.
Netflix also took a risky bet by investing in producing original content but that paid off as some of the most acclaimed and popular shows in recent times have been on Netflix, rather than on some of the more established networks. This has helped Netflix build a loyal fan base and stay ahead of its competitors.
Now, let us see how to invest in Netflix shares from India. Here are three ways.
Directly invest in Netflix stocks
You can invest in Netflix from India by opening a US brokerage account either through technology platforms like Vested that offers this service, or a foreign brokerage that has a direct presence in India. At Vested, our goal is to allow you to invest in US stocks easily. To invest, you do not need to pay any brokerage fees. Vested’s process is completely paperless and can be completed in a matter of minutes. All you need is your PAN number, an image of your PAN card, and address proof.
To invest in US stocks like Netflix, you need to wire funds to the US. As an Indian resident, you are allowed to do this under the RBI’s Liberalized Remittance Scheme which lets you remit up to US $250,000 per year per person.
As of January 14, 2022, Netflix’s share price was US 525.69 which is almost Rs 40,000. However, the high price should not be a deterrent to investing in Netflix shares as Vested offers you the option of fractional investing in shares. So, you can invest in a fraction of a Netflix share for as little as $1 and own a part of the company. To know more about fractional investing watch this video.
Invest in ETFs that hold Netflix stocks
The other way you can invest in Netflix stock from India is through an ETF. ETFs refer to a collection of many stocks/bonds which are traded under one fund. They are similar to mutual funds. However, ETFs are traded on the stock exchange with real-time pricing and provide an easy and cheap way to get exposure to a sector or a group of companies. One option to invest via ETFs is that you buy an ETF on a platform like Vested.
For example, Vested lets you invest in index ETFs like the Invesco QQQ Trust which is based on the NASDAQ 100 index and has Netflix as one of its holdings.
Another way to invest in Netflix stocks from India is to buy ETFs available in India that invest in US indexes like the Nasdaq 100.The Motilal Oswal Nasdaq 100 ETF in India has Netflix among one of its holdings. You can also invest in a fund of fund like Mirae Asset NYSE FANG+ ETF Fund of Fund which has Netflix among one of its ten stocks. Remember, you can invest in these ETFs without opening a new US brokerage account. However, your returns might be impacted by tracking errors that these ETFs suffer from (we explain this in a video here).
Invest in Indian mutual funds that have exposure to Netflix stocks
In this case, you will be investing in funds of funds i.e. a local mutual fund that invests in a mutual fund available in the US. Note that there is no investment limit as an investment will be made in Indian rupees. Mutual funds such as Edelweiss’ US Technology Fund of Fund offer exposure to Netflix but often to a limited extent. Also, this approach may turn out to be more costly. You will have to pay an annual expense ratio (fees charged to manage the fund). The expense ratio of these funds tends to be higher, because apart from the general India fund management fee, it also includes an additional expense charged by the underlying international schemes they invest in.
Remember, before buying any stock, you should understand your risk profile. Also, investing directly in stocks like Netflix would be a high-risk investment for your portfolio.
Our team members at Vested may own investments in some of the aforementioned companies/assets. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for an investor’s portfolio. Note that past performance is not indicative of future returns. Investing in the stock market carries risk; the value of your investment can go up, or down, returning less than your original investment. Tax laws are subject to change and may vary depending on your circumstances.
This article is meant to be informative and not to be taken as an investment advice, and may contain certain “forward-looking statements,” which may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, without limitation, estimates with respect to financial condition, market developments, and the success or lack of success of particular investments (and may include such words as “crash” or “collapse”). All are subject to various factors, including, without limitation, general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors that could cause actual results to differ materially from projected results.