A dozen domestic equity funds focussed on international equities, which have handsomely outperformed Indian counterparts, are now open for fresh subscriptions. After regulatory caps had kept inflows restricted, investors once again have the chance to participate in global themes that have delivered as much as 31% returns over the past year—far ahead of the 2–5% gains posted by most domestic large- and flexi-cap funds.
Where can investors put their money abroad?
Over 18 feeder and fund-of-fund schemes remain accessible, spanning U.S., European, Asian, and global innovation themes. Among them: Axis Global Equity Alpha FoF, Kotak Global Innovation FoF, Franklin U.S. Opportunities FoF, and PGIM India Global Equity Opportunities FoF. Edelweiss offers offshore schemes such as the US Technology Equity FoF and Europe Dynamic Equity Offshore Fund, though these impose daily caps of Rs 10 lakh per PAN.
On the ETF side, Mirae Asset NYSE FANG+ ETF and Motilal Oswal Nasdaq 100 ETF can be traded, though no new units can currently be created.
What does it cost?
Expense ratios for feeder and FoFs typically range from 1.5–2.5%, versus 1–2% for domestic hybrids. ETFs are cheaper, at 0.1–0.5%. Exit loads may apply if investors redeem within 28–365 days. Taxation is similar to equity-oriented schemes: short-term capital gains are taxed at 15%, long-term at 10% on gains above Rs 1 lakh, with currency movements also impacting final returns.
Regulatory limits
The RBI caps overseas stock and active fund investments at $7 billion and ETFs at $1 billion, with individual AMCs allowed up to $1 billion and $300 million, respectively. Redemptions free up quotas, creating sporadic windows of availability—such as the current one.
Performance edge
International equity funds have returned 24% YTD and 31% over the past year on average, while Indian large-cap funds delivered just 5%, flexi-caps 2%, and small-caps negative returns. Over three years, international funds have compounded at 22% annually, led by U.S. tech and consumer stocks. This is despite the fact that global funds face currency risk and thematic concentration. The regulatory constraints on limits to overseas investment has also ensured that it is not a highly marketed product. Despite high recent returns, flows thus remain muted. “There is no broad-based client interest right now,” says Shweta Rajani, Head – Mutual Funds at Anand Rathi Wealth.
How global is global?
Despite being marketed as ‘global’, nearly 70–80% of overseas schemes remain U.S.-centric, particularly in technology.
For example, Franklin U.S. Opportunities invests almost entirely in the Franklin U.S. Opportunities Fund, where the top ten stocks—NVIDIA (9 %), Meta (7 %), Microsoft (6.8 %), Broadcom (5 %), Apple (4.6 %), Amazon (4.5 %), Mastercard (3.4 %), Netflix (2.9 %), Alphabet (2.8 %) and Axon (2.7 %), make up roughly 50% of assets. Edelweiss US Technology Equity FoF feeds 99 % into JPMorgan US Technology Fund, whose top ten holdings, led by Apple, Microsoft, Alphabet, Amazon, NVIDIA and Meta, typically cover 55–65 % of the portfolio. Axis Global Equity Alpha FoF, investing in Schroder ISF Global Equity Alpha, still holds about 60 % in North America with Microsoft, Apple, Alphabet and Amazon among the largest positions and a top-ten share near 50 %.
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