Amidst rally, US tech stocks continue to find favour in Indian MF portfolios

According to data from Anand Rathi, around 33 active funds (excluding ETFs and Index funds) have international exposure with Edelweiss Technology Fund leading the pack at 29.94 percent (up from 29.43 percent in March), followed by DSP Value Fund at 16.61 percent (down from 27 percent) and Axis Innovation Fund at 16.43 percent (down from 17.95 percent).

The US benchmark indices have staged a strong rally over the last few months, with the S&P 500 Index rising roughly 30% since April. These gains were led primarily by large-cap technology stocks such as NVIDIA which has gained around 65 percent since April 1 and Microsoft which has gained around 32 percent.

Data shows that Indian mutual funds have been cashing in on the gains and are continuing to increase allocations to high-growth US technology stocks, with technology, innovation, and growth-oriented schemes driving the buying momentum.

The funds, benefiting from this rally and currency movements, have delivered returns averaging around 20% over the past three years with ICICI Pru Value Fund (25 percent) which has around 4.5 percent global exposure and SBI Technology Fund (23 percent) will 11.34 percent exposure) seeing the maximum gains in active funds.

Indian mutual funds' overseas investments continue to operate under restricted investment conditions, with only select schemes allowing fresh inflows.

Funds such as ABSL Global Emerging Opportunities Fund, Axis Global Equity Alpha FoF, Kotak Global Innovation FoF, PGIM India Emerging Markets Equity FoF, and Sundaram Global Brand Theme Equity Active FoF permit both SIP and lumpsum investments with no limits, while many others impose strict caps and most completely closing all subscriptions.

For instance, Edelweiss US Technology Equity FOF and Edelweiss US Value Equity Offshore Fund allow a maximum of Rs 10 lakh per PAN per day. This was recently increased from Rs 1 lakh per PAN. Several popular ETFs including Mirae Asset NYSE FANG+, Mirae Asset S&P 500 Top 50 ETF, and Motilal Oswal NASDAQ 100 ETF remain closed for fresh subscriptions though investors can trade existing units on the exchange.

According to data from Anand Rathi, around 33 active funds (excluding ETFs and Index funds) have international exposure with Edelweiss Technology Fund leading the pack at 29.94 percent (up from 29.43 percent in March), followed by DSP Value Fund at 16.61 percent (down from 27 percent) and Axis Innovation Fund at 16.43 percent (down from 17.95 percent). The largest increase in exposure was seen in Franklin India Technology Fund at 7.54 percent from 5.52 percent, ICICI Pru MNC Fund at around 3.19 percent from 1.3 percent and ICICI Pru Technology Fund at 4.48 percent from 3.46 percent.

In July, the value of Indian mutual funds’ foreign equity holdings rose on average by roughly 6.4 percent to Rs 51,705.99 crore. Among individual funds, according to PrimeMF database, PPFAS Mutual Fund increased by 9.1 percent to Rs 13,425.17 crore, ICICI Prudential Mutual Fund rose 15 percent to Rs 7,485.40 crore, and Motilal Oswal Mutual Fund grew 4.8 percent to Rs 13,899.73 crore, highlighting their active role in expanding overseas equity exposure

Who has been buying what?

Active funds like ICICI Prudential Technology Fund, ICICI Prudential Innovation Fund, and Aditya Birla Sun Life Digital India Fund have been aggressively reshaping portfolios, focusing on valuations, earnings growth, and market trends.

Adobe Systems Inc., for instance, saw ICICI Prudential Technology Fund raise holdings from 5,209 shares (Rs 17.24 crore) to 47,888 shares (Rs 149.97 crore).

Viram Shah, founder & CEO of Vested Finance, highlights that this surge in allocations reflects a strategic shift with Indian mutual funds now recognizing that “mega forces drive returns more than traditional economic cycles,” with artificial intelligence reshaping competitive advantages across industries. The recent 10% increase in US tech exposure is “merely the opening move in a broader strategic repositioning,” he says.

Passive funds, including ETFs such as Mirae Asset NYSE FANG+ ETF, Mirae Asset S&P 500 Top 50 ETF, and Motilal Oswal NASDAQ 100 ETF, saw value gains driven by rising US stock prices. For example, Motilal Oswal NASDAQ 100 ETF’s NVIDIA holdings appreciated from Rs 874.07 crore to Rs 1,004.85 crore, while Mirae Asset NYSE FANG+ ETF’s 49,746 shares of Meta Platforms Inc. increased in value from Rs 314.09 crore to Rs 336.87 crore.

Shah, meanwhile, emphasizes that AI-driven productivity gains make this trend resilient. “While trade tensions create short-term noise, the underlying revolution in business efficiency and innovation remains concentrated in American tech giants,” he says. For Indian funds, US tech exposure has evolved “from optional diversification to essential portfolio infrastructure,” allowing them to capture structural growth that domestic markets cannot replicate while naturally hedging against bilateral trade uncertainties, he adds.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.