Indian Mutual Funds Boost Exposure to U.S Tech Stocks Amid Market Rally

Indian mutual funds are steadily increasing their exposure to U.S. technology stocks as a powerful rally in American markets continues to lift valuations. According to data from Anand Rathi, the value of foreign equity holdings in Indian mutual fund portfolios rose by 6.4% in July to ₹51,705.99 crore, with technology-focused schemes driving the momentum.

Strong Rally in U.S. Tech Fuels Buying

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U.S. benchmark indices have surged in recent months, with the S&P 500 climbing nearly 30% since April, led by technology giants. NVIDIA has soared by around 65% since April 1, while Microsoft has advanced about 32%. Indian mutual funds have taken advantage of this rally, adding positions in high-growth companies and innovation-led sectors.

Among active funds, the Edelweiss Technology Fund held the highest overseas exposure at 29.94% in July, up from 29.43% in March. It was followed by DSP Value Fund at 16.61% (down from 27%) and Axis Innovation Fund at 16.43% (down from 17.95%). The sharpest increases in allocations came from Franklin India Technology Fund, rising to 7.54% from 5.52%, and ICICI Prudential MNC Fund, climbing to 3.19% from 1.3%.

Returns & Restrictions

Funds benefiting from the rally and currency movements have delivered strong three-year returns, averaging around 20%. ICICI Prudential Value Fund (25%) and SBI Technology Fund (23%) recorded the highest gains among active schemes.

Despite the strong interest, overseas investments remain subject to restrictions. Only select schemes such as ABSL Global Emerging Opportunities Fund, Axis Global Equity Alpha FoF, and Sundaram Global Brand Theme Equity FoF currently allow fresh inflows without caps. In contrast, funds like Edelweiss U.S. Technology Equity FOF and Edelweiss U.S Value Equity Offshore Fund restrict investments to ₹10 lakh per PAN per day, up from the earlier ₹1 lakh limit. Popular ETFs, including Mirae Asset NYSE FANG+, Mirae Asset S&P 500 Top 50 ETF, and Motilal Oswal NASDAQ 100 ETF remain closed for new subscriptions, though existing units are tradeable on exchanges.

Active Reshuffling & AI-Driven Strategies

Active managers have been reshaping portfolios to capture the rally. For instance, ICICI Prudential Technology Fund significantly boosted its holding in Adobe Systems, increasing its position from 5,209 shares (₹17.24 crore) to 47,888 shares (₹149.97 crore).

Industry experts highlight that this surge reflects a broader strategic repositioning. Viram Shah, CEO of Vested Finance, said Indian funds are recognising that “mega forces drive returns more than traditional cycles,” with artificial intelligence reshaping competitive advantages across industries. He added that the recent increase in U.S. tech exposure is “merely the opening move in a broader repositioning.”

Passive funds have also benefited. For example, Motilal Oswal NASDAQ 100 ETF saw the value of its NVIDIA holdings rise from ₹874.07 crore to ₹1,004.85 crore, while Mirae Asset NYSE FANG+ ETF reported gains in its Meta Platforms stake, from ₹314.09 crore to ₹336.87 crore.

Conclusion

Indian mutual funds are positioning U.S. technology as a core component of their global strategy, shifting from optional diversification to structural necessity. With artificial intelligence and digital transformation driving long-term growth, fund managers see American tech as an essential pillar for capturing innovation-led returns—even as regulatory restrictions and global trade uncertainties remain in play.