International mutual funds have emerged as the top performers over the past year, delivering average returns of up to 20%, with some funds far surpassing that mark. Market experts attribute the rally to strong gains in U.S. tech stocks, a broad global market recovery, and rupee depreciation, which has amplified returns for Indian investors.
Rajesh Minocha, Certified Financial Planner and Founder of Financial Radiance, said international funds have benefitted from “sectoral leadership of global giants and conducive global liquidity,” with higher returns seen across both short and long horizons.
Top Performers and Laggards
Two Mirae Asset schemes led the pack — Mirae Asset Hang Seng TECH ETF FoF delivered an impressive 83.27% return in one year, while Mirae Asset NYSE FANG+ ETF FoF gained 60.65%. At the other end, HSBC Brazil Fund posted the lowest return at 5.92% over the same period.
Subscription Caps and Regulatory Limits
Edelweiss Mutual Fund has imposed a daily investment cap of ₹1 lakh per PAN across seven of its international schemes effective August 19. This includes its ASEAN Equity, Greater China Equity, US Technology, Emerging Markets Opportunities, Europe Dynamic Equity, US Value Equity, and MSCI India Domestic & World Healthcare 45 Index funds. The move comes as the AMC nears the $1 billion overseas investment ceiling set by SEBI in February 2022.
The RBI’s broader industry-wide limit on overseas investments for mutual funds remains at $7 billion, with the possibility that other fund houses may soon introduce similar caps if limits are breached.
Returns Across Horizons
International mutual funds have outperformed domestic funds in multiple timeframes.
- Last 3 months: Average return 10.59%
- 2025 YTD: Average return 15.04%
- Last 1 year: Top across all 21 equity categories, while 17 domestic categories saw negative returns.
- Last 6 months: Average return 8.75%, ahead only of tech-focused funds.
Global vs Domestic Indices
Globally, Hang Seng gained 43.87% over the last year, followed by DAX (30.75%), Nasdaq (20.24%), and S&P 500 (14.77%). In contrast, India’s BSE Sensex and Nifty 50 inched up just 0.27% and 0.18%, respectively.
Expert Advice on Allocation
Minocha recommends a 10–15% allocation to international funds within an equity portfolio, citing diversification benefits and access to global innovation leaders. “SIPs can help manage volatility, while lumpsum investing can be considered during a sharp correction,” he said. However, he cautioned that domestic funds with partial global exposure cannot replicate the diversification benefits of full-fledged international funds.
He also advised investors to pay close attention to the geographical exposure of their chosen schemes, as performance can vary significantly between regions.
Disclaimer: The views and recommendations mentioned are those of the expert and do not represent the opinion of The Capital Mirror.
