Top 5 equity mutual funds gain over 10% in August, international funds dominate. Time to go global?

The top five equity mutual funds gained over 10% return in August with international funds dominating the domestic ones, according to an analysis by ETMutualFunds showed. There were nearly 613 equity funds in the said time period.

The analysis further showed that out of top 15 equity funds, 12 funds were international funds and the other three funds were small cap and sectoral or thematic funds.

DSP World Gold Mining Overseas Equity Omni FoF, delivered the highest return of around 36.42% in the month of August. This was followed by Nippon India Taiwan Equity Fund which gave 21.30% return in the said time period.


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DSP World Mining Overseas Equity Omni FoF and ICICI Pru Strategic Metal and Energy Equity FoF delivered 20.82% and 15.48% returns respectively in the said time period. Mirae Asset NYSE FANG+ETF FoF was the last one to deliver double-digit returns. The fund delivered a return of 11.48% in the month of August.

What drove global funds’ August gains?

Rajesh Minocha, a Certified Financial Planner (CFP), Founder of Financial Radiance told ETMutualFunds that the outperformance was driven by several factors; overseas markets performed well, particularly in parts of the US technology sector and among other growth stocks. Moreover, currency fluctuations also contributed and this matters in rupee terms, since the rupee depreciated against foreign currencies.

One month isn't enough to predict the future, and the fact that nine of the top funds were overseas funds still offers a worthwhile lesson: spreading risk across regions can be beneficial. It doesn't imply that investors should immediately increase their overseas exposure significantly at this time, Minocha further said.

Hrishikesh Palve, Director, Anand Rathi Wealth Limited shared with ETMutualFunds that investors should look at such outperformance of international funds in August in the right context; most of the top performing funds have exposure to the US market, while specific themes such as global mining, metals and energy have also done well.

“The Taiwan market has been particularly strong, gaining around 11% over the past month, while the S&P 500 and NASDAQ have gained around 4% and 6.7% respectively. Taiwan's market rally was driven by AI-linked hardware such as semiconductor and memory chips while the US market benefited due to the rally in AI and Tech stocks.”

This international performance has benefited Taiwan and certain sector based global thematic funds. However, average 1 month performance of international funds is around 3.6%, so one month of strong returns of few funds should not be taken as evidence that the entire international category is doing well, Palve further said.

How did other funds perform in August?

Samco Active Momentum Fund offered a return of 9.59% in August. This was followed by Mirae Asset Global X Artificial Intelligence & Technology ETF FoF which gave 9.23% return in the same time period.

Edelweiss US Technology Equity FOF and Edelweiss Recently Listed IPO Fund delivered 7.67% and 7.63% returns respectively in August. Axis Greater China Equity FoF offered a return of 7.37% in the mentioned period.

Four funds from Motilal Oswal Mutual Fund - Motilal Oswal Focused Fund, Motilal Oswal Active Momentum Fund, Motilal Oswal Large & Midcap Fund and Motilal Oswal Multi Cap Fund gave 7.06%, 6.82%, 6.78% and 6.74% returns respectively in August.

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TRUSTMF Small Cap Fund offered a return of 6.17% in August. SBI Automotive Opportunities Fund and Axis NASDAQ 100 US Specific Equity Passive FOF gave 5.97% return each in August.

Mirae Asset S&P 500 Top 50 ETF FoF and SBI Small Cap Fund gave 5.66% and 5.55% returns respectively in August. Edelweiss Greater China Equity Off-shore Fund and Bajaj Finserv Healthcare Fund delivered 4.93% returns each in August.

HDFC Defence Fund and HDFC Innovation Fund delivered 4.45% returns each in August. Abakkus Flexi Cap Fund offered 2.95% return in August. HDFC Flexi Cap Fund offered a return of 1.39% in August.

Sundaram Infra Advantage Fund and SBI PSU Fund were the last ones to deliver positive returns as the funds gave 0.01% return each in August.

Mirae Asset Hang Seng TECH ETF FoF and ICICI Pru FMCG Fund lost 4% and 3.61% respectively in August. Parag Parikh Flexi Cap Fund, the largest active fund and flexi cap fund, lost 1% in August.

Parag Parikh Large Cap Fund lost 0.46% in August. Kotak Consumption Fund and Kotak Large Cap Fund lost 0.25% and 0.23% respectively in August. HDFC Infrastructure Fund lost the lowest of around 0.01% in August.

Where to invest next and SIP or lumpsum?

Palve said that increasing international allocation based on recent outperformance could lead to recency bias; domestic equity funds may be better suited for long-term wealth creation, as they are easier for Indian investors to track. International markets are also volatile and influenced by global factors and fresh subscriptions in most international funds are currently suspended due to overseas investment limits.

He further said that investors should focus on domestic equity, with a diversified allocation across market capitalisations; at current market levels, both SIP and lump sum can be used as a strategy to invest and investors can maintain 50 to 55% in large caps, 20 to 25% in mid caps and the balance in small caps in the equity portion to ride all market cycles smoothly.

Minocha said that for most people, Indian mutual funds should remain the main component of their portfolio, and international funds could be a smaller addition to broaden geographic diversification. Overseas mutual fund purchases in India are still restricted, so resident Indians might use GIFT City as an alternative option under the LRS scheme. PPFAS GIFT has recently reduced the minimum one-off investment from US$5,000 to US$500. Yet, SIPs are not available at this time.

Since current global prices seem high, I wouldn't put a large amount in at one time; instead, I would like to spread my lump-sum purchases over time. The aim should be diversification, and chasing recent strong overseas returns should not be the primary strategy, Minocha further said.

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We considered all equity funds including sectoral and thematic funds. We considered regular and growth options and calculated performance from August 1, 2026 to August 29, 2026.

Note, the above exercise is not a recommendation. The exercise was done to find out how equity funds performed in August. One should not make investment or redemption decisions based on the above exercise. One should always make investment decisions based on their risk appetite, investment decisions and financial goals.

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

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