India's global equity funds swell six-fold on US tech FOMO
Indian investors have poured record capital into global equity funds as US tech rallies, but wealth managers warn that momentum-chasing flows and hidden currency and regulatory risks threaten to erode returns.
Assets under management of India-domiciled funds invested exclusively in overseas equities have surged more than six-fold in five years, reaching ₹98,182 crore by the end of May 2026. The inflows, up from ₹15,955 crore in December 2020, are driven by a stark performance gap between domestic and US markets. The Nifty 50 has fallen 4% over the past year, while the NASDAQ Composite has gained over 26%.
The capital shift follows a broader pattern of chasing recent momentum. In 2025, spot gold prices jumped 75% and gold ETF net inflows surged 282% to ₹42,961.46 crore, but gold prices have risen just 6% so far in 2026. Now, enthusiasm around artificial intelligence and US tech is drawing capital outward.
A familiar pattern
Wealth managers warn this is less about strategic allocation and more about fear of missing out. “It is the same behavioural pattern wearing different clothes,” said Nilesh Shah, managing director of Kotak Mahindra AMC. He noted that the current narrative of indefinite US exceptionalism mirrors past market manias.
Shankar Sharma, founder of GQuant Investech, pointed to memory-chip companies like Micron as evidence of investors ignoring historical cyclicality. “But how many people today know this history and the real intricacies of these industries?” Sharma said. He argued that investors routinely underestimate the complexity of global markets, where politics, currencies and interest rates intersect.
The diversification myth
A central concern is that investors are conflating geographic expansion with genuine risk reduction. Swarup Anand Mohanty, vice-chairman and CEO of Mirae Asset Investment Managers (India), warned that buying identical business models in different countries offers no real protection.
“But if you are investing in the same kind of stocks in both markets, which are driven by the same fundamentals and news cycle, it could backfire,” Mohanty said. Viram Shah, CEO of Vested Finance, agreed, noting that diversification “only helps when you're adding something different from what you already own.”
Currency and regulatory traps
Returns have also been flattered by a weakening rupee, which has depreciated 12% over the past year from around 90 to roughly 95.5 against the dollar. Viram Shah cautioned that this currency tailwind is a variable to plan for, as it can easily reverse and erase equity gains.
Beyond market risks, Indian investors face a dense web of regulatory hurdles. Kotak AMC's Shah noted that compliance burdens under the Liberalised Remittance Scheme, Schedule FA reporting and the Black Money Act are severe. For offshore investors, he warned, “one missed disclosure can create more pain than a 10% market correction.”
The broader Indian mutual fund industry saw average AUM rise over 15% in the quarter ending June 2026. However, for wealth managers like Shravan Sreenivasula of Avendus Wealth Management, global investing has become "a bit too hyped." He is currently advising high-net-worth clients to wait and increase their domestic exposure instead.
