Indian mutual funds significantly expanded their overseas investments in 2025-26, helping reduce their net foreign liabilities even as investments by non-resident investors in Indian mutual fund schemes continued to grow, according to the latest survey released by the Reserve Bank of India (RBI). The survey, covering 53 mutual funds and their asset management companies (AMCs), found that foreign liabilities of mutual funds rose 3.3 per cent year-on-year to $31.5 billion as of March 2026, largely due to an increase in the market value of units held by overseas investors. At the same time, mutual funds sharply increased their overseas asset holdings by 23.9 per cent to $10.2 billion, driven primarily by investments in foreign equity securities. The RBI noted that the increase in overseas assets was mainly driven by higher holdings of equity securities, with total overseas assets rising from $8.2 billion at end-March 2025 to $10.2 billion at end-March 2026.
Consequently, net foreign liabilities declined to $21.3 billion from $22.3 billion a year earlier, representing a significant improvement in the mutual fund sector's foreign investment position. The RBI stated that the decline in net foreign liabilities "reflected the increase in overseas assets relative to foreign liabilities." The survey highlighted strong participation from non-resident investors, with the UAE, US, UK and Singapore emerging as the largest sources of investments in Indian mutual funds, together accounting for around half of all mutual fund units held by non-residents both at face value and market value. The UAE remained the largest contributor, with investments at market value amounting to ₹61,299 crore, followed by the US at ₹35,502 crore and the UK at ₹28,886 crore. The market value of mutual fund units held by non-residents rose to ₹2,97,530 crore at end-March 2026 from ₹2,60,548 crore a year earlier, while foreign liabilities in units issued by mutual funds at face value increased 16.4 per cent to ₹73,471 crore during the year.
Indian mutual funds stepped up their global diversification efforts, with overseas equity investments climbing 37.5 per cent to ₹93,602 crore during FY26. The US accounted for the largest share of overseas equity holdings, with US equity securities standing at ₹59,403 crore at end-March 2026, accounting for 63.5 per cent of total overseas equity holdings. This was up from ₹43,531 crore a year earlier, representing an increase of 36.5 per cent. Luxembourg was the second-largest destination, with holdings of ₹18,948 crore, or 20.2 per cent of overseas equity holdings, followed by Ireland at ₹10,003 crore, or 10.7 per cent. Holdings in Hong Kong stood at ₹1,468 crore, while those in Canada rose significantly to ₹1,110 crore from ₹215 crore a year earlier.
