Why Are International Mutual Funds Falling? Nasdaq Selloff Explained

Investing outside India can spread your money across different businesses and economies. But if several overseas funds depend on the same technology companies, a different country does not necessarily bring a different set of risks.

That question matters after 43 of 52 overseas equity and equity-linked schemes recorded negative one-month returns in an ACE MF analysis reported by Moneycontrol on November 2. That works out to 82.69% of the sample, rather than a verified count of every international mutual fund available in India.

The more revealing finding is the difference between strategies. Our calculations from AMFI NAVs show that a US technology fund lost more than 10% over a month while a US value fund gained. Understanding that gap tells investors more than the number of funds in the red.

Why Are International Mutual Funds Falling After the Nasdaq Selloff?

US technology shares faced selling pressure as investors questioned how quickly spending on artificial intelligence would produce enough cash. Reuters attributed the October 30 selloff to these concerns following results from Amazon and Intel. This describes the market reaction; it does not establish the cause of each fund’s monthly loss.

Amazon’s results help explain the concern. Although its operating cash flow grew, spending on property and equipment pushed its cash remaining after those investments into negative territory. A business can grow quickly while leaving investors worried about how much money it must spend to sustain that growth.

Sources: Nasdaq Global Index Watch; Reuters closing-market report, cross-checked against Associated Press. These are one-session index price changes, not Indian mutual fund returns.

The decline extended beyond technology, but the Nasdaq 100 suffered more than the S&P 500. Nasdaq-focused funds here target the Nasdaq 100, which contains large non-financial companies listed on Nasdaq, rather than the wider Composite.

The effect reaches an Indian investor through the fund’s assets. When overseas shares lose value, the overseas fund or exchange-traded fund, known as an ETF, can lose value; the Indian fund holding its units then reflects that change in its net asset value, or NAV, the value of each unit.

Timing matters, however. Indian exchange hours end before US trading begins, and overseas NAV publication and valuation practices differ. An October 30 Indian NAV should not automatically be described as capturing the complete October 30 US session. A one-month return also includes many trading days before that Friday.

How Have Nasdaq, Technology and Broader US Mutual Funds Performed?

The table uses Direct Growth plans: Direct excludes distributor commission; Growth keeps income invested. Returns are calculated in rupees from AMFI NAVs on common dates.

Direct Growth figures differ slightly from the reference report. Keeping one plan type avoids confusing expenses with strategy. All six schemes remained positive over the year despite five recording a monthly decline.

Why Did US Technology Funds Fall While a US Value Fund Gained?

The Edelweiss US Technology Equity FoF invests through JPMorgan Funds – US Technology Fund. Its disclosed underlying portfolio included chipmakers, software businesses and cybersecurity companies. These businesses face different commercial risks, even when investors group them under technology.

The value fund invests through JPMorgan Funds – US Value Fund, whose approach considers companies’ prices relative to their business fundamentals. Its disclosed portfolio included banks, healthcare companies and energy producers alongside technology-related businesses. Different holdings and position sizes can therefore produce different outcomes within the same country.

Crucially, value did not mean avoiding Big Tech. The underlying value portfolio disclosed Amazon at 6.11%, Microsoft at 5.75% and Apple at 3.95%. Its reported allocation also included 20.92% in “Finance” and 9% in “Energy”, using the issuer’s classifications.

These disclosures establish different exposures, but cannot identify each stock’s October contribution. They do not justify assigning the entire return gap to one sector or stock.

Even two Nasdaq funds can diverge. Motilal Oswal Nasdaq 100 FoF owns an Indian-listed ETF, while Navi’s mandate uses overseas Nasdaq ETFs or index funds. ETF market prices can differ from the value of their underlying assets, creating a premium or discount that can change independently of the index.

That risk deserves investigation alongside valuation timing, cash and expenses. Explaining the precise gap would require matched daily holdings, ETF prices and valuations.

Currency added another influence. Exchange-published reference rates show a dollar bought fewer rupees at the end of October than at the end of September. For otherwise unchanged, unhedged dollar assets, that movement reduces their rupee value.

Sources: NSE reference-rate disclosures and Metropolitan Stock Exchange reference-rate archives. These reference rates indicate direction, not the exact foreign-exchange contribution booked by each scheme.

For illustration, an 8% dollar loss combined with a hypothetical 3% dollar appreciation becomes a 5.24% rupee loss: 0.92 × 1.03 − 1. The same investment with a 3% dollar depreciation loses 10.76%. Currency can soften or deepen losses; it provides no automatic protection.

Do International Mutual Funds Actually Diversify Your Portfolio?

Yes, they can reduce dependence on India. But geographical diversification does not guarantee diversification across sectors, companies or currencies. Different fund names can conceal repeated exposure to the same businesses.

We compared the Motilal Oswal Nasdaq ETF’s full portfolio with the disclosed top 30 holdings of JPMorgan US Technology Fund, both dated August 31, 2026. Across 16 matching companies, adding the smaller weight in each portfolio produced at least 28.42% overlap. This is a conservative estimate for the underlying portfolios, not a complete overlap calculation for the Indian FoFs.

The broader market also contains those large businesses. Vanguard’s VTI, named in Navi Total Stock Market FoF’s investment mandate, disclosed NVIDIA and Microsoft among its holdings. Owning a broad-market fund alongside a technology fund can improve breadth while still increasing exposure to individual technology leaders.

Sources: Official Motilal Oswal monthly portfolio; Edelweiss’s disclosure of the JPMorgan underlying portfolio; Vanguard holdings disclosure. All weights dated August 31, 2026. These are underlying portfolio weights, not final Indian scheme exposures. The appendix explains the overlap calculation.

Consider someone holding an Indian technology fund, a Nasdaq fund and an AI fund. The Indian fund may own different companies but depend on spending by the same global technology customers. Some Indian technology schemes also own overseas stocks directly: Edelweiss Technology Fund disclosed NVIDIA and Microsoft in its September portfolio.

That investor may have diversified company addresses while remaining dependent on technology spending. International investing remains useful when it adds businesses, industries and economic exposures that complement the rest of the portfolio. The test is what the combined investments own and depend on.

What Should Investors Review After the Nasdaq Selloff?

Start with the role assigned to each fund. A broad international mutual fund allocation and a concentrated technology allocation serve different purposes. Money needed soon should not depend on a sector recovering by a particular date.

Next, total repeated company exposure. If 20% of your portfolio sits in a fund with 8% in one company, that contributes approximately 1.6% company exposure before adding your other funds. With a FoF, include the proportion invested in its underlying fund as another step.

Finally, check transaction rules and the consequences of any change. Edelweiss’s October 21 notice permanently closed previously paused SIPs and STPs in its US Technology and US Value schemes, among others. Fresh subscription limits, existing instalments and redemption rights are separate questions; a restriction on adding money does not itself freeze withdrawals.

Before switching, inspect the latest AMC notice, applicable exit load and tax treatment for your purchase dates. Our view: the strongest reason to reassess an allocation is discovering that its actual exposure differs from its intended purpose. A monthly loss alone cannot establish that diversification failed, just as several overseas fund names cannot establish that it succeeded.