US-focused funds: 13 funds with Rs 50,000 crore corpus see the steepest cuts; experts suggest staying put till dust settles

Mutual funds with exposure to US stocks—particularly tech-heavy portfolios—witnessed significant declines on April 3 and 4, following a sharp sell-off in the broader US markets. The downturn came in the wake of US President Donald Trump’s announcement of broad-based tariffs on partnering countries, triggering concerns over global trade stability. Currently, around 13 mutual funds have varying degrees of exposure to US stocks. The total value of these investments, as on March 31, stood at approximately Rs 49,100 crore, according to data from Prime Database.

Experts suggest that investors keep a watch on how this plays out, investing in the right opportunities but not to be in a hurry to quit. Fund managers too are keeping a watch on their portfolio and not planning to completely exit their portfolios.

The impact

The biggest impact over the last two days has been for “Mag 7” stocks—The “Magnificent Seven” comprise Alphabet Inc, Amazon.com Inc, Apple Inc, Meta Platforms Inc, Microsoft Corp, Nvidia Corp and Tesla Inc—with the total market capitalisation erosion of these scrips amounting to $1.8 trillion. As per primemfdatabase.com, as on February 28, 2025, mutual fund holdings in US stocks were the highest in these Mag 7 stocks with Alphabet Inc. (8.93 percent of total assets under management or AUM), followed by Microsoft Corp. (6.97 percent), Meta Platforms Inc. (6.64 percent) and Amazon.com Inc. (5.72 percent).

The broader market also faced steep losses. Over two days, the S&P 500 index plunged 10.5 percent. The Dow Jones Industrial Average declined by 9.3 percent, while the tech-heavy Nasdaq Composite experienced the sharpest drop, falling nearly 11.4percent

Among mutual funds, passive schemes with the highest exposure to US stocks include Mirae Asset NYSE FANG+ ETF (100 percent invested in US stocks), Mirae Asset S&P 500 Top 50 ETF (99 percent) and Motilal Oswal NASDAQ Q 50 ETF (99.6 percent). In actively managed funds, Aditya Birla Sun Life International Equity Fund (G) holds the highest exposure at 98.7 percent, followed by ICICI Prudential US Bluechip Equity Fund (G) at 98 percent and the Nippon India US Equity Opportunities Fund (G) at 82.4 percent.

In terms of net asset value or NAV, the most affected funds, according to ACE MF data, were Motilal Oswal NASDAQ Q 50 ETF, which registered the steepest NAV decline of 10.7 percent since March 31, followed closely by the ICICI Prudential US Bluechip Equity Fund (G) at 10.4 percent. Other index funds with major NAV losses included Mirae Asset NYSE FANG+ ETF,  Mirae Asset S&P 500 Top 50 ETF, Motilal Oswal Nasdaq 100 ETF and Motilal Oswal S&P 500 Index Fund – Regular (G), which saw NAV reductions of around 10 percent each. Active funds like Nippon India US Equity Opp Fund(G) and Edelweiss Technology Fund also saw their NAVs fall by around 7 percent.

What does this mean for investors and funds? 

Fund managers like Jay Kothari, senior vice president, global head, international business, and lead investment strategist at DSP Mutual Fund are not rushing to make major changes to their portfolios. Kothari believes that when valuations drop significantly, it often makes sense to wait for the dust to settle, and doesn’t mean investors should exit entirely. “Market sentiment tends to swing between extremes. When things are good, investors are willing to pay any price—often unjustifiably so. And when things look bleak, even attractive valuations get ignored. The truth usually lies somewhere in between,” he explained, adding that the recent sharp correction in global markets, including the US, may signal a phase of over-capitulation. Kothari emphasised the importance of sticking to valuation discipline and stock selection.

While it is difficult to say that US stocks are currently a good bet, experts are taking cautious, stock-specific calls.

“If something looks fundamentally sound, it might be worth adding—when the time is right,” Kothari said, adding that while it’s hard to predict whether the downturn will last a few days or stretch out longer, DSP’s view is to start adding positions gradually. “The world is not ending, and if COVID taught us anything, it’s that this too shall pass.”

Juzer Gabajiwala, director at Ventura Securities, advises against rushing into global funds at this point, noting that most schemes do not allow participation, limiting retail investors’ access. “The alternative option—investing in ETFs (exchange-traded funds)—is also unappealing since they are trading at a premium over their underlying value. This means I would always be paying more than the actual worth of the assets (despite the corrections),” he explained.

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