Investor appetite for international mutual funds is making a strong comeback, driven by their recent outperformance compared to domestic schemes. In August alone, net inflows touched nearly ₹500 crore — the highest since October 2021. At the same time, about 25,500 new accounts were added, marking the sharpest monthly increase in 19 months.
Although most international schemes remain closed to fresh subscriptions due to regulatory uncertainty, investor demand remains strong. Many Indian fund houses’ schemes invest primarily in U.S. and Chinese equities, both of which have surged significantly over the past year. The rupee’s depreciation has further boosted returns, making these funds more attractive than local options.
Compared to domestic equity funds, international funds offer geographical diversification benefits. Despite challenges such as high tariffs and currency weakness in India, global investments have delivered strong returns. However, experts caution that valuations in many global markets are elevated relative to long-term averages, making these funds more suitable for long-term investors.
Indian investors today have three main avenues for overseas exposure: mutual funds, GIFT City-based international funds, and digital platforms offering direct equity access to markets like the U.S.
Investment through GIFT City-managed funds is also rising rapidly. By June 2025, total foreign investments via this route stood at $1.43 billion, nearly 70% higher than $842 million at the end of March. Similarly, PMS assets grew 23% quarter-on-quarter to $1.46 billion in April–June, compared to $1.18 billion in March 2025. These vehicles are especially popular among high-net-worth individuals (HNIs) and family offices.