Full Form of FPI
FPI stands for Foreign Portfolio Investment. It refers to investments made by individuals or institutional investors in financial assets of a foreign country. Here are some key points to understand about FPI:
- Nature of Investment:
- FPI typically involves the purchase of stocks and bonds in a foreign country.
It is considered less risky than Foreign Direct Investment (FDI), as it does not involve significant control over the companies in which investments are made.
Benefits of FPI:
- Diversification: Investors can diversify their portfolios by investing in foreign markets.
- Access to Growth: It provides access to potentially high-growth markets.
Liquidity: FPI investments can often be sold quickly if needed.
Regulatory Framework:
- Each country has its own regulations governing FPI.
Investors should be aware of the tax implications and legal requirements before investing.
Examples of FPI:
- Mutual funds investing in international stocks.
- Pension funds that allocate a portion of their investments to foreign markets.
Understanding FPI is crucial for investors looking to expand their investment horizons beyond domestic markets.