Indian mutual funds’ holdings in overseas equity securities rose 37.5 per cent year-on-year to Rs 93,602 crore by end-March 2026, data released by the Reserve Bank of India (RBI) showed. The growth was largely driven by mark-to-market gains owing to a sharp rally in key markets and a surge in investor interest in overseas schemes amid domestic market underperformance.
Overseas schemes offered by Indian mutual funds, which are largely concentrated in the US market, attracted nearly Rs 5,000 crore in FY26.
This was despite most schemes remaining closed for investments or imposing restrictions on fresh investments, as MFs have limited room for fresh foreign investments due to the industry hitting the overseas investment limit.
The US remained the dominant market, accounting for 63.5 per cent of overseas equity holdings, which rose 36.5 per cent to Rs 59,403 crore during FY26. Holdings in Luxembourg and Ireland rose 39 per cent and 31.6 per cent, respectively.
The rise in overseas investments came amid a strong rally in several global markets during FY26, with AI-related technology and semiconductor stocks driving gains.
The increase in overseas assets also helped narrow mutual funds’ net foreign liabilities. Overseas assets rose 23.9 per cent to $10.2 billion, faster than the 3.3 per cent increase in foreign liabilities to $31.5 billion. As a result, net foreign liabilities declined to $21.3 billion from $22.3 billion, a decline of about 4.3 per cent.
Foreign liabilities reflect units of Indian mutual funds held by non-residents, measured at market value, along with a small amount of other foreign liabilities. The RBI said the increase was “primarily due to the rise in market value of units issued to non-residents.”
At end-March, foreign liabilities stood at Rs 2.98 trillion, of which Rs 2.97 trillion was the market value of units held by non-residents and Rs 670 crore was other foreign liabilities.
Among foreign investors, those based in the UAE were the largest, accounting for 20.6 per cent of the market value of units held by non-residents, followed by the US at 11.9 per cent, the UK at 9.7 per cent and Singapore at 7.2 per cent. Together, these four accounted for nearly half of the holdings. The data also includes NRIs who use their Indian permanent address under the “Others” category.
