Going Global: How Indian Mutual Funds Let You Invest Beyond Borders

Why an investor should have allocation to global markets?

Major global indices like Nasdaq-S&P 500 (US), Hang Seng, DAX (Germany) and Nikkie 225 (Japan) have sizably outperformed the Nifty 50 in 2025, as seen below:

Exposure to these global indices can not only provide diversification benefits, but also act as a hedge against INR depreciation.

How can an investor participate in this?

• Direct investing in global stocks. This will involve creating a foreign account and complicated remittance, tax and other regulations

• Relatively smaller exposure through routine equity mutual funds, which can invest a small portion (< 35%) directly in overseas stocks

• Via specific domestic mutual funds investing/tracking these global markets/indices through various schemes (which we discuss in detail below)

Tell me more about the last option

These are mutual fund schemes by Indian AMCs, which provide their investors access to international markets by investing in internatioal ETFs, index funds or feeder funds (and occasionally, directly investing in stocks). These schemes have already garnered an AUM of ₹50,000cr+, with a sizable exposure in US centric schemes.

These mutual funds can generally be further broken down into the following types:

• Global Index Funds (tracking indices like MSCI World)

• Emerging Market Funds

• US-focussed Funds

• Country or Region Specific Funds (Europe, Japan, Asia)

• Thematic/sector funds (AI, tech, energy, consumption)

An illustrative list of such schemes with AUM of ₹2,000cr+ is as follows

* Data as of 16 January 2026 sourced from Morningstar.

Check out Creso for a comprehensive list of overseas funds, for recommendations to clients

Things to keep in mind

• Fund Availability: RBI regulations impact AMC’ ability to accept new investments in its international schemes, as some might pause inflows based on regulatory limits. Hence there may be limited time windows to invest and the option of SIPs may not be always available. Conversely, for predictability of foreign outflows (to comply with regulations), some AMCs accept only SIPs.

• Currency Risk: A depreciating rupee can enhance gains but also increase risk, as currency fluctuations can work both ways and can impact your overall returns.

• Fund objective: The fund’s investment strategy, target geography, expense ratio, and past performance, needs to be thoroughly evaluated.

• Tax implications: Tax rules for foreign mutual funds differ from those for domestic ones. It is recommended to consult with your tax advisor. Brief comparison on taxability with domestic equity fund is as under:

• Tracking Error: The 2-layer expenses (Indian AMC plus foreign Fund of Funds) and foreign exchange fluctuations (including related hedging costs, if any), can imply a higher tracking error (in either direction). Simply put, the return on these mutual funds may be higher or lower than the underlying global benchmark (that the fund is tracking) due to these expenses and foreign exchange rate fluctuations.

Disclaimer: This blog has been written solely for educational purposes. The schemes mentioned herein are only examples and should not be construed as recommendations/investment advice. Readers should conduct their own research and assessments, to form an independent opinion about investment decisions.

Mutual fund investments are subject to market risks, read all the related documents carefully before investing.