Mutual fund investors are missing the boom of overseas markets

Retail investors who had stayed put without redeeming their investments in foreign funds benefited from market value gains, said Sunil Subramaniam, CEO of Sense and Simplicity. | Photo credit: Getty Images

Assets under a fund of funds (FoF) of MFs investing in global markets rose 28 per cent to ₹35,965 crore in November from ₹28,065 crore in January due to mark-to-market gains.

HSBC Brazil Fund and Edelweiss Europe Dynamic Equity Offshore Fund have achieved the highest returns of 56 percent and 51 percent respectively in the past year.

Invesco India – Invesco Pan European Equity Fund of Fund and HSBC Global Emerging Markets Fund have returned 43 percent.

The DSP World Gold Mining Overseas Equity Omni FoF and DSP World Mining Overseas Equity Omni FoF stole the show with returns of 169 percent and 80 percent respectively over the past year.

SEBI regulated cap

However, new MF investors could not invest in these funds as capital market regulator SEBI has barred MFs from accepting new inflows into these overseas funds in 2022, limiting the MF sector’s overseas investments to $7 billion and a separate cap of $1 billion for exchange-traded funds.

Sunil Subramaniam, CEO of Sense and Simplicity, an individual think tank, said while retail investors would have missed the opportunity to invest abroad through MFs, high net worth and ultra-high net worth investors have taken the LRS route to invest in overseas markets.

Retail investors who had stayed put without redeeming their investments in foreign funds benefited from market value gains, he said.

International scenario

While the Nifty 50 returned around 9 percent through 2025, the Dow Jones Industrial Average and the tech-focused Nasdaq Composite indices returned 13 percent and 20 percent, respectively. The S&P 500 index achieved a return of 17 percent last year.

The MSCI All Country World Index rose by more than 21 percent last year and recently reached a record high. European shares rose thanks to profits from major banks. Asia’s prospects depend on policy support and demand for AI, with gains unevenly distributed across markets.

South Korea, long one of the weakest developed markets despite being home to major companies Samsung and Hyundai, topped the global rankings, with a KOSPI of almost 76 percent.

The Hang Seng Index in Hong Kong ended the year almost 31 percent higher, while the SSE Composite Index in Shanghai rose more than 21 percent. In Japan, the Nikkei 225 rose about 28 percent. The FTSE 100 in London and the DAX 40 in Frankfurt both entered 2026 with an increase of more than 20 percent.

Published on January 2, 2026