Mutual Funds Ramp Up Investment In US Tech Giants; Holdings Surge 10% In May

Tuesday, June 17th: Indian mutual funds significantly increased their investments in US technology stocks in May 2025, resulting in a 10% month-on-month rise in the total value of their foreign equity holdings. This strategic move heightened their focus on high-growth US tech giants, even during the current global market volatility and selective trimming in other sectors.

As of the end of May, 13 Indian mutual fund houses reported foreign equity exposure, with their aggregate overseas portfolio value surging from ₹42,007 crore in April to ₹46,287 crore.

Key Contributors to the Investment Increase:

• PPFAS Mutual Fund: Added ₹1,482 crore, taking its foreign portfolio value to ₹11,340 crore.
• Motilal Oswal Mutual Fund: Raised overseas holdings by ₹1,036.93 crore to ₹12,574.37 crore.
• SBI Mutual Fund: Increased holdings by ₹886.36 crore.
• Other funds like Mirae Asset, Nippon India, and Axis Mutual Fund also reported value upticks in their overseas portfolios.

Focus On ‘Magnificent 7’ Tech Stocks

A notable trend observed was the increased stake of mutual funds in major US technology players, particularly the formidable “Magnificent 7” (Microsoft, Meta Platforms, Alphabet, Amazon, NVIDIA, Apple, and Tesla). These companies have been instrumental in driving S&P 500 gains in May 2025 after a challenging start to the year.

Alphabet saw the highest net increase in shares bought, while Microsoft maintained its position as the top holding by value. EPAM Systems also witnessed a significant rise in the number of shares added.

Stocks Sold By Indian Mutual Funds

Conversely, some stocks experienced heavy selling by Indian mutual funds:

• Vodafone Group PLC-ADR: ₹354.42 crore worth of shares offloaded.
• Apple Inc.: Value dropped by ₹92.56 crore due to trimming.
• Other exits included Vertex Pharmaceuticals, SK Telecom (fully exited), ELI Lilly, Huntington Ingalls, and Cadence Design.

Returns And Valuations of the Invested Stocks

Top-performing additions delivered strong returns in May:

• NVIDIA: +24.1%
• Tesla: +22.8%
• Meta: +18%
• Microsoft, Alphabet, EPAM: 8% to 16%

In contrast, the stocks that were sold generally underperformed, confirming the funds’ timely exits:

• Vertex Pharmaceuticals dropped 13.2%.
• UnitedHealth fell a significant 26.6%.
• ELI Lilly declined 18%.

Despite the strong performance, valuations for these tech giants remained steep:

• Microsoft: 35.5x forward earnings
• NVIDIA: 32.7x
• Shopify: 77x

Tech Remains A Core Holding

Despite some short-term to medium-term concerns and high valuations, the technology sector remained a core holding for Indian mutual funds. In May, it remained the second-largest sector in their portfolios with an 8.3% weightage, just behind private banks. However, the MOSL Fund Folio report noted that the sector remains underweight in approximately 11 schemes, suggesting a selective approach by some funds. This sustained interest in US tech underscores the belief in their long-term growth potential driven by innovation and market dominance.

This report reflects mutual fund activity as of May 2025 and provides insights into foreign investment strategies with a focus on US technology stocks.

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