India asset managers launch overseas funds as retail investors shift money abroad

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India asset managers go overseas

Highlights

At least six new overseas-focused funds, including the JioBlackRock Advantage World Equity Fund, launched in the past six months to capture record outbound retail investment from India.
RBI data show individual international investments from India more than doubled year on year to nearly $2.3 billion in H1 2026, on track to exceed the $2.65 billion 2025 record.
Weak domestic equities, a record-low rupee, and strong global returns drove overseas fund-of-funds AUM up 42% to 488 billion rupees in September, while Indian retail trading account openings fell 25% in FY 2026.

GIFT City funds expand as overseas demand rises

As reported by Reuters, at least half a dozen overseas-focused funds have been launched over the past six months to capture record outbound retail investment from India. They include the JioBlackRock Advantage World Equity Fund launched this week by the joint venture between Jio Financial and BlackRock.

Fund managers say interest in global assets is becoming a structural part of household portfolio allocation rather than a short-term trade. Shobhit Mathur, co-founder of Ionic Asset, says demand for international exposure has risen clearly over the last two years as investors seek a permanent overseas component in their portfolios.

Reserve Bank of India data show international investments by individuals in India, made directly or through funds, more than doubled from a year earlier to nearly $2.3 billion in the first half of 2026. That pace puts flows on track to exceed the 2025 full-year record of $2.65 billion.

The RBI caps cumulative overseas investment by Indian funds at $7 billion and sets a $1 billion limit for a single asset manager, leaving little room for fresh unit creation in conventional structures. Those limits do not apply to overseas funds launched by domestic managers through GIFT City in Gujarat, helping firms such as HDFC Asset Management, Parag Parikh and Aditya Birla Sun Life roll out new offerings.

Market weakness and currency pressure reshape retail portfolios

India's overseas investing boom reflects weak performance in the local market, high valuations and limited access to AI-related stocks. The benchmark Nifty 50 is down 5.3% over the last two years, while the MSCI Emerging Markets Index is up 47% and the S&P 500 in the U.S. has gained 32%.

The rupee hits a record low this year as Indian stocks face sustained institutional selling and the economy absorbs higher energy costs from the Iran war. One investor, Rajasthan-based adviser Ankit Khandelwal, says he has raised the overseas share of his portfolio to more than 60% from about 5% in early 2025, citing stronger returns abroad and persistent rupee weakness.

Domestic participation is also shifting. Retail trading account openings for Indian investments fall by a quarter to 33 million in the fiscal year ending March 2026, while assets in overseas fund-of-funds schemes rise 42% year on year to 488 billion rupees in September and the number of registered investors climbs 34% to nearly 2 million, according to the Association of Mutual Funds in India.

Tight supply of international products is also distorting pricing, with some overseas exchange-traded funds trading at steep premiums to net asset value. The Motilal Oswal Nasdaq Q50 ETF trades at times in September at premiums of 65% to 80%, while some Mirae Asset overseas ETFs command premiums of 27% to 58%.

Retail investors are also seeking direct exposure to U.S. and other foreign stocks through new fractional investing platforms launched this month by Groww, Zerodha and Angel One. Indian regulators remain cautious about outbound investment flows, but three people at regulatory bodies tell Reuters that authorities are not considering measures to curb them.

In our earlier article on the Reserve Bank of India’s rupee defence, we explained that the RBI deployed an estimated $75–$80 billion via spot dollar sales and dollar-rupee swaps after June 8, contributing to a notable drawdown in foreign-exchange reserves. We also noted that pressure on the currency was being driven by factors such as higher oil prices, rising global yields and persistent foreign equity outflows, prompting the central bank to introduce additional steps to curb dollar demand.

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