Global mutual funds recover post Tariff lows. How long will momentum sustain?

Time of India

28-04-2025

As global markets have rebounded over the past two weeks following a decline triggered by
Trump
's tariffs, market experts believe the recovery is driven by a few key factors. They note that near-term momentum may continue, particularly in regions receiving fiscal support, such as Europe.
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'Markets have recovered recently due to a few key factors. First, the U.S. economy remained robust, especially with strong employment figures in early 2025, despite volatility caused by new tariffs. Global growth also stayed resilient, forecasted at 3.3% for 2025, with emerging markets like India (expected 6.4% growth) leading the charge,' said Chakrivardhan Kuppala, Cofounder and Executive Director, Prime Wealth Finserv.
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He adds that importantly, Europe introduced significant fiscal stimulus—Germany alone committed €500 billion, and the EU an additional €800 billion—boosting confidence and economic outlook and additionally, easing inflation globally (expected at 4.5% in 2025, down from 5.9%) has comforted investors.
In the last two weeks,
Hang Seng
gained 5.10% whereas DAX index gained 9.17%. Nasdaq and S&P 500 indices gained 3.94% and 3.02% in the same period. Some other indices Nikkei 225 and NYSE went up by 6.31% and 3.73% respectively in the last two weeks.
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The Indian benchmark indices - Nifty50 and BSE Sensex - offered a return of 5.30% and 5.40% respectively over the last two weeks.
Another expert, Shweta Rajani, Head -
Mutual Funds
at Anand Rathi Wealth Limited said that the minimal expected impact of tariffs on India has kept fears in check, while ongoing negotiations and talks around a potential Free Trade Agreement (FTA) have lifted overall sentiment and also the valuations have corrected to fair levels, making the market more attractive.
'Despite global uncertainties and Trump policies, India has remained resilient. The long-term outlook is strong, and current momentum is expected to be sustained,' she added.
Around 12 international funds have offered double-digit returns in the last two weeks, with funds based in Taiwan, Brazil, the US, China, and the Hang Seng. Nippon India Taiwan Equity Fund offered the highest return of 19.77% in the last two weeks, followed by DSP World Mining FoF and HSBC Brazil Fund which gave 13.43% and 13.18% returns respectively in the same period.
Two schemes from Edelweiss Mutual Fund - Edelweiss Europe Dynamic Equity Off-shore Fund and Edelweiss US Technology Equity FOF delivered 12.54% and 11.60% returns respectively in the mentioned horizon. The other seven funds gave returns ranging between 10.35% to 11.56% in the said period.
On the other hand, around 14 funds in the category delivered minimal negative returns ranging between 0.55% to 2.79% in the last two weeks.
With the global markets starting to perform better, the Head of Mutual Funds at Anand Rathi Wealth Limited shared historical performance of international funds and other diversified categories and mentioned that these gains were driven by geopolitical news like the Trump tariffs, not economic fundamentals plus such short-term rallies are often volatile and unsustainable and investors should avoid reacting to short-term trends and instead focus on fundamentals and long-term growth.
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ETMarkets.com
Data shared by Shweta Rajani
The above data shared by Shweta Rajani mentions that the Nifty 50 shows stronger market efficiency (0.52) when compared to Shanghai (0.29), Hang Seng (-0.66), and Taiwan (0.09) and over the long term, Indian and U.S. markets have performed better than China and Japan.
She advised that Indian markets offer easier access to data and are simpler to track, making them more suitable for investors and given the complexity of global markets, well-diversified domestic funds remain the better choice for investors.
Chakrivardhan Kuppala mentioned that considering the current global landscape, investor interest in international funds is understandable, though caution remains important.
'Regions benefiting from direct fiscal support (Europe), strong structural growth (India), and specific sectors like technology and healthcare in Asia appear relatively resilient. While not a direct recommendation, investors naturally consider these geographies due to their current economic dynamics and growth projections, aiming for balanced diversification rather than purely chasing short-term performance,' he added.
In the last month, indices other than Nifty50 and BSE Sensex ended in the red. Hang Seng lost a maximum of around 6.78% in the last month, followed by Nikkei 225, which went down by 5.54%. Dow Jones and S&P 500 lost 5.17% and 2.95%, respectively, in the same period.
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What is the outlook for international mutual funds?
With indices in red earlier and now showing a stellar performance in the short term, Shweta Rajani said that we don't recommend investing in international funds, but if one looks for global diversification in the portfolio can explore only up to 5 -10% of the overall portfolio. 'Investors can consider investing across the range of domestic diversified equity funds to get exposure across the range of categories and sectors to generate good alpha and returns in the long term,' she added.
The other expert believes that international funds have recently attracted attention, particularly those centred around Europe and Asia.
While citing the reason for these economies gaining attention, Chakrivardhan Kuppala said that Europe's substantial fiscal spending—totaling more than €1.3 trillion—alongside moderating inflation and declining interest rates, offers potential stability and growth compared to the uncertainty in the U.S and similarly, in Asia, India's continued strong growth trajectory of around 6.4% makes it an attractive option for investors seeking alternatives to typical advanced economies.
'Global business confidence is somewhat muted due to these uncertainties, making it prudent to approach international investing as part of a broader diversification strategy rather than expecting immediate outperformance,' he added.