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Over the past three years, several international mutual funds have delivered exceptionally high returns, driven by rapid global innovation and growth in sectors such as semiconductors and U.S. technology. For Indian investors looking to diversify beyond domestic markets, these funds have become attractive choices. They offer access to high-growth global companies and reduce portfolio risk through geographical and sector diversification.

This article explains what international mutual funds are, how they operate, who can invest in them, and highlights the top-performing international funds based on three-year returns.

Why International Mutual Funds Are Gaining Popularity

Many Indian investors are seeking opportunities beyond the domestic market to participate in large global growth themes such as:

• U.S. technology and AI

• Semiconductor innovation in Taiwan

• Advanced electronics and global manufacturing

• Global digital transformation

International funds allow investors to access foreign companies that are otherwise difficult to invest in directly due to restrictions, currency regulations, and high entry costs. They also help balance risk, as global markets often behave differently from Indian equities.

What Are International Mutual Funds?

International mutual funds invest in equity or debt assets outside of India, including companies listed in the United States, Europe, Japan, Taiwan, and other global markets.

These funds generally operate through two structural models:

1. Direct Global Funds

The mutual fund directly invests in overseas stocks and financial instruments.
Example companies: Apple, Nvidia, Tesla, Microsoft, TSMC.

2. Fund of Funds (FoF)

A domestic AMC invests in an international fund abroad, and investors buy units of this FoF. In this case, your investment indirectly goes into the foreign markets.

Can Indian Investors Invest in International Funds?

Yes. Indian investors can easily participate through:

• Direct global mutual funds

• Fund of Funds (FoF)

FoF schemes are generally easier to access because they are not restricted by LRS (Liberalised Remittance Scheme) limits, since the AMC invests offshore on behalf of investors. Direct global funds and international ETFs may sometimes be subject to SEBI or RBI limits, but most FoF schemes remain open for investment.

In terms of taxation, international mutual funds are currently taxed similar to debt funds, not as Indian equity funds.

Top-Performing International Mutual Funds (3-Year Return Ranking)

1. Mirae Asset NYSE FANG+ ETF FoF – Direct Plan

• 3-year CAGR: 63.73%

• NAV: ₹36.07

• AUM: ₹2,624 crore

• Expense ratio: 0.07%

• Sharpe Ratio: 1.97

This fund invests mainly in the FANG+ basket, offering exposure to U.S. technology giants. Around 90% of the portfolio is invested in high-growth tech companies known for volatility but strong long-term potential. Suitable for aggressive investors.

2. Nippon India Taiwan Equity Fund – Direct Plan

• 3-year CAGR: 38.19%

• NAV: ₹18.39

• AUM: ₹2,612 crore

• Key sectors: Technology (41.82%), Industrials (32.55%)

• Top holding: Chroma ATE (9.07%)

• Sharpe Ratio: 1.17

This fund benefits from Taiwan’s booming semiconductor industry and global electronics manufacturing growth. The investment theme is narrow but fast-growing.

3. Edelweiss US Technology Equity FoF – Direct Plan

• 3-year CAGR: 35.57%

• NAV: ₹33.71

• AUM: ₹346.96 crore

• Allocation: ~96% in JPMorgan US Technology Fund

• Sharpe Ratio: 0.91

Gives exposure to U.S. technology segments including AI, cloud computing, software, and hardware. Performance is strongly aligned with major U.S. tech market trends.

4. Motilal Oswal Nasdaq 100 FoF – Direct Plan

• 3-year CAGR: 34.40%

• NAV: ₹49.03

• AUM: ₹5,253 crore

• Expense ratio: 0.42%

• Sharpe Ratio: 1.38

One of the most trusted international funds, providing exposure to the Nasdaq 100 universe of non-financial U.S. companies.

Who Should Consider International Mutual Funds?

• Investors seeking global diversification

• Those who wish to invest in technology, semiconductors or innovation-based themes

• Investors with a long-term horizon and moderate to high risk tolerance

• Individuals already heavily invested in Indian equities and want balance

Final Word

International mutual funds offer Indian investors a pathway to global opportunities and can strengthen a portfolio through diversification. However, these funds are still exposed to market risk, currency fluctuations, and geopolitical uncertainty.

Disclaimer

This information is for educational purposes only and should not be considered investment advice. Mutual fund investments are subject to market risk. Always consult a financial advisor before investing.

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