Overseas Assets of Indian Mutual Funds Shrink 5.6% to $8.3 Billion in FY25, RBI Survey Finds

Indian mutual funds have trimmed their overseas holdings by 5.6% in fiscal year 2025, bringing the total to approximately $8.3 billion, down from $8.81 billion in FY24, according to a recent Reserve Bank of India (RBI) report.
Decline Driven by Drop in Foreign Equity Holdings

The drop in overseas assets stemmed primarily from lower investments in foreign equity securities. Equity holdings in key international markets such as the U.S., Ireland, and Taiwan fell, pushing down the total value of overseas mutual fund assets. More than 95% of these foreign equity investments remain concentrated in the U.S., Luxembourg, and Ireland.

Domestic Equity Investment Remains Robust

Amid the reduction in overseas exposure, domestic investor participation appeared to strengthen. Net inflows into domestic equity mutual fund schemes surged nearly 25% to ₹29.45 lakh crore in FY25, showing sustained investor confidence in home-market equities.

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Foreign Liabilities Rise on Higher Non-Resident Investment

While overseas assets declined, the liabilities side of the ledger grew. Mutual fund foreign liabilities rose almost 19.9%, reaching $30.5 billion. This surge was driven by a significant increase in units issued to non-resident investors.

Among foreign holders, investors from the United Arab Emirates (UAE) held the largest share by both face value and market value, with ₹52,549 crore invested in Indian mutual fund schemes. Australia recorded the highest growth in liabilities, with over a 40% increase year-on-year.

AMC Overseas Asset Movement

Asset management companies (AMCs) saw a modest rise in their overseas holdings, primarily in regions such as Guernsey, Singapore, and Mauritius. Meanwhile, AMC foreign liabilities rose 16.8%, hitting $7.5 billion—fueled by an uptick in inbound direct investments.
Conclusion

While domestic stocks saw better flows, the RBI's FY25 data shows a cautious withdrawal of Indian mutual funds from foreign equity markets.  Liabilities increased concurrently as non-residents' desire for Indian finances grew. Even while interest in Indian mutual funds is growing among international investors, the overall picture shows a shift away from global exposure and back towards domestic assets.