The growing turbulence in the Indian equity market, marked by steep corrections in benchmark indices, has contributed to a nervous investment environment.
Headwinds such as persistent geopolitical uncertainties, tariff tantrums of U.S. President Donald Trump instigating trade wars, rising crude oil prices, a weakening rupee against the greenback, the risk to inflation trajectory, the chances of U.S. Federal Reserve refraining from reducing interest rate much, and the possibility of an economic slowdown are weighing on the market. Foreign investors are dumping Indian equities, which is likely to keep the market volatile in the near future.
Against this backdrop, when the U.S. in the endeavour to Make America Great Again (MAGA), certain investors are showing keen interest in U.S.-oriented Equity Mutual Funds, — be it the U.S. Equity Opportunities Funds, U.S. Blue-chip Funds, U.S. Focused Equity Funds, U.S. Fund of Funds, etc.).
The allure of the U.S. equity market lies in the presence of numerous large and highly successful businesses, including the Magnificent 7 (Microsoft, Alphabet, Apple, Nvidia, Tesla, Meta Platforms, and Amazon.com).
The Indian Rupee (INR) has dropped 2.8% against the U.S. Dollar (USD) so far in 2025, and further depreciation cannot be ruled out amidst trade wars.
In such a scenario, investors are perhaps expecting potential outsized returns in the U.S. to compound returns with Indian mutual funds investing in U.S. stocks.
The U.S. economy has also fared remarkably well and shown exceptional resilience over the past five years.
In the aftermath of the COVID-19 pandemic, economic growth in the U.S. outpaced that of the U.K., France, Germany, and other G7 nations.
Just before election day, a story from The Economist described the U.S. economy as “the envy of the world,” stating it had “left other rich countries in the dust.”
In CY 2024, the U.S. equity market witnessed a remarkable rally as the S&P 500 gained 23.3% absolute returns, building on the gains of 24.2% clocked in 2023. The Dow Jones Industrial Average (DJIA) — which measures 30 U.S. blue-chip companies and covers all the industries except transportation and utilities — gained 12.9%, while the tech-heavy Nasdaq 100 gained 28.6%.
» Read More
