MF Tracker: Nippon India Taiwan Equity Fund tops 1-year return chart with 118% gains. Can the strong performance continue?

Nippon India Taiwan Equity Fund, an international fund, has emerged as the standout performer with a staggering return of over 118.44%, an analysis by ETMutualFunds showed. The analysis further showed that the fund emerged as the best performer in the last three years with 60.10% return.

Launched on December 11, 2021, this international fund is not given any rating by Value Research and Morningstar both.

Based on the trailing returns, the fund underperformed against its benchmark and category average in the shorter horizon but managed to outperform its benchmark and category average in the longer time period.


Also Read | Explained: Want to know how long your investment will take to double? Use Rule of 72

In the last three months, the fund lost 2.04% against a gain of 3.70% by its benchmark and 1.78% as the category average. In the last six months, the fund gave 39.13% compared to 48.82% by the benchmark and 15.82% as the category average.

In the last one year, the fund posted a return of 118.60% against 23.21% as the category average and 83.77% by the benchmark. In the last three years, the fund gave 60.39% whereas the benchmark gave 43.01% and the category average was 25.57%. Since its inception, the fund has posted a CAGR of 30.26%.

As the fund was launched in December 2021, the fund has not completed five years of existence.

How did an expert decode the performance?

Protima Dhawan, Director & Unit Head, Anand Rathi Wealth Limited analysed the performance and told ETMutualFunds that the strong performance has largely come from Taiwan’s equity market, particularly its technology and semiconductor stocks; around 85% of the fund is invested in technology, so the sharp rally in AI and semiconductor-related companies has had a significant impact on returns.

“The portfolio has benefited from companies involved in the AI hardware ecosystem, including names such as TSMC and Alchip, along with semiconductor testing, equipment, and related technology companies such as MediaTek. This exposure to a strong technology cycle has been the driver of the fund’s performance over the last few years.”

Dhawan further said that currency movement has also contributed to the returns for an Indian investor, but it has played a smaller role compared to the gains from the underlying Taiwan equities.

Based on yearly returns since 2022, the fund has delivered negative returns in 2022 only as the fund lost 34.39%. In 2023, the fund gave 44.53%, 24.22% in 2024 and 50.74% in 2025.

The primary investment objective of Nippon India Taiwan Equity Fund is to provide long-term capital appreciation to investors by primarily investing in equity and equity-related securities of companies listed on the recognised stock exchanges of Taiwan, and the secondary objective is to generate consistent returns by investing in debt and money market securities of India.

As per the last data available of August 2026, Nippon India Taiwan Equity Fund had an AUM of Rs 1,128 crore. Launched in December 2021, the scheme is managed by Kinjal Desai.

How investments fared

A monthly SIP of Rs 10,000 made in the fund at the time of inception would have been Rs 19.45 lakh now with an XIRR of 54.78%. A monthly SIP made three years ago would have been Rs 9.46 lakh with an XIRR of 78.27%.

The lumpsum investment of Rs 1 lakh made in this fund at the time of the inception would have been Rs 3.56 lakh now with a CAGR of 30.24%. A lumpsum investment made in this fund three years ago would have been 4.03 lakh with a CAGR of 59.14%.

Also Read |Quant Mutual Fund says investors should stay agile in portfolio allocation amid market shifts

Taiwan valuations: Is there room for further upside?

Dhawan said after the sharp gains in Taiwan equities, investors should have more moderate return expectations going forward, the market has benefited significantly from the strong performance of technology and semiconductor companies, and valuations have also moved up. Compared with Indian equity funds, the fund is currently at a higher valuation.

“The fund is also concentrated, with over 30 stocks in the portfolio. With nearly 85% of the portfolio invested in technology, the fund is closely linked to the performance of the sector. This can work well when the technology cycle is strong, but it can also lead to higher volatility when sentiment or earnings expectations change. The fund’s standard deviation has also been on the higher side.”

Dhawan further said this does not mean that Taiwan equities cannot generate further returns. However, after the sharp run-up, it may be difficult to sustain the kind of returns seen in recent years and there is also a possibility of mean reversion if valuations or expectations start to normalise. For investors with a long-term horizon, Indian equities may offer relatively more attractive valuations at current levels, with the potential benefit of mean reversion as well.

Among the top 10 holdings, the fund has invested 6.92% in MediaTek (Taiwan), 6.04% in Mpi Corporation, and 5.99% in Nanya Technology Corporation.

The sectoral holdings of the fund includes 81.17% in others, 6.92% in consumer durables and 2.53% in electricals.

ETMutualFunds analysed the other key ratios of the fund in a three year period. Based on the last three years, the scheme has offered a Treynor ratio of 3.26 and an alpha of 0.55. The sortino ratio of the scheme was recorded at 0.86.

The return due to net selectivity was recorded at (0.49) and return due to improper diversification was recorded at 1.05 in the last three years.

Time to increase international exposure?

With limited funds now open for subscription and accepting SIPs or lumpsum investments, investors are wondering if it is the time to increase global exposure in their portfolios? Dhawan said strong recent returns should not, by themselves, be a reason to increase overseas allocation and the decision should depend on what the investment is intended to achieve, along with the investor’s time horizon and risk appetite.

“Valuations and future return potential are more important than looking at the returns already delivered. Indian equities are currently available at relatively more attractive valuations than several international markets, while the domestic market also offers opportunities across different market capitalisations and investment styles. For a long-term investor, it is useful to assess the relative valuations and growth potential across markets rather than base the allocation only on recent performance.”

Dhawan further said that the reopening of an international fund can provide an opportunity to invest, but limited availability should not create a sense of urgency and an investment decision should be based on the underlying portfolio, valuations, and the role the fund is expected to play in the overall portfolio.

Also Read | NFO Insight : ICICI Prudential Contra Fund opens for subscription. Is contra investing suited for current market conditions?

How did other international funds perform?

Around 58 funds have completed three years of existence. Post Nippon India Taiwan Equity Fund, Mirae Asset NYSE FANG+ETF FoF gave 58.36% return in the last three years. DSP World Gold Mining Overseas Equity Omni FoF, Mirae Asset S&P 500 Top 50 ETF FoF and Mirae Asset Global X Artificial Intelligence & Technology ETF FoF gave 55.50%, 45.87%, and 40.77% returns respectively in the said time period.

Mahindra Manulife Asia Pacific REITs FOF gave the lowest return of around 8.64% in the last three years.

Dhawan said international funds can provide diversification when domestic and overseas markets respond differently to economic cycles, interest rates, earnings trends, and other market-specific factors which can help reduce dependence on a single market.

However, the diversification benefit depends on what the fund actually invests in. A country-specific fund with a large exposure to one sector, such as technology, can be quite concentrated despite being an international investment. A broader strategy across countries and sectors can provide more diversified exposure.

The expert further said that a small allocation to international funds can be considered depending on the investor’s goals and risk appetite. For someone with a long-term horizon, this can complement a well-diversified domestic portfolio and provide exposure to global markets.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

If you have any mutual fund queries, message ET Mutual Funds on Facebook/Twitter. We will get them answered by our panel of experts. Do share your questions at ETMFqueries@timesinternet.in along with your age, risk profile, and Twitter handle.