Indian MFs’ Overseas Equity Holdings Hit ₹93,602 Cr

Indian mutual funds saw their overseas equity holdings surge by 37.5 percent to ₹93,602 crore by the close of March 2026, according to data released by the Reserve Bank of India. This significant increase was primarily fueled by mark-to-market gains from rallies in key global markets and heightened investor interest in international schemes.

Understanding the Surge in Overseas Holdings

The growth in these holdings reflects a strong performance in international equities, particularly those related to AI technology and semiconductor stocks. Despite most overseas schemes facing closures or restrictions on fresh investments due to industry-wide limits, they still attracted substantial inflows.

• Total overseas equity holdings: ₹93,602 crore (up 37.5% year-on-year)
• Inflows to overseas schemes (FY26): Nearly ₹5,000 crore
• US market share of holdings: 63.5% (rising 36.5% to ₹59,403 crore)
• Luxembourg holdings: Rose 39%
• Ireland holdings: Increased 31.6%

The United States remained the dominant market for these investments, accounting for nearly two-thirds of the total overseas equity holdings by Indian mutual funds. Other European markets also experienced notable growth in holdings.

Impact on Net Foreign Liabilities

This rise in overseas assets played a crucial role in reducing the net foreign liabilities of Indian mutual funds. While foreign liabilities increased, the faster growth of overseas assets helped to narrow the overall liability gap.

• Overseas assets: Rose 23.9% to $10.2 billion
• Foreign liabilities: Increased 3.3% to $31.5 billion
• Net foreign liabilities: Declined 4.3% to $21.3 billion (from $22.3 billion)

Foreign liabilities represent units of Indian mutual funds held by non-residents, measured at their market value, alongside a smaller portion of other foreign liabilities. The RBI noted that the primary driver for the increase in these liabilities was the rising market value of units issued to non-residents.

Composition of Foreign Investors in Indian MFs

As of end-March, the total foreign liabilities stood at ₹2.98 trillion, with the market value of units held by non-residents making up ₹2.97 trillion of this sum. A smaller amount of ₹670 crore constituted other foreign liabilities.

• UAE-based investors: Accounted for 20.6% of units held by non-residents
• US-based investors: Accounted for 11.9%
• UK-based investors: Accounted for 9.7%
• Singapore-based investors: Accounted for 7.2%

These four regions collectively held almost half of the market value of units owned by non-residents. The ‘Others’ category includes Non-Resident Indians (NRIs) who use their Indian permanent address for these investments.

The sustained growth in Indian mutual funds’ international asset base, despite existing investment ceilings, underscores a notable shift in investment strategy and market dynamics, contributing to a reduction in the sector’s net foreign liabilities.