- US equity allocations in Indian portfolios have grown from 15% to 22-25% due to market outperformance
- S&P 500 trades near 20 times forward earnings, with Nasdaq even more expensive, signaling high valuations
- Iran conflict adds volatility, making US equities less of a safe haven and increasing risk factors
Share Market News: For years, US equities have been the glamour pocket in many Indian portfolios. They delivered strong returns, offered dollar diversification, and gave easy access to the world's biggest technology names.
But with the Iran conflict keeping markets edgy, the question is no longer whether US markets are good. It is whether Indian investors now have more US exposure than they ever planned for. Follow Markets Live Updates
What began as a 15 per cent allocation in many portfolios has, in some cases, quietly crept up to 22-25 per cent. Not because investors added more money, but because US markets ran far ahead of Indian benchmarks. That silent drift matters far more in a volatile global environment.
Ajay Kumar Yadav, Group CEO & CIO at Wise Finserv, says this is the time to recalibrate, not exit.
His reasoning is simple. Valuations are no longer cheap. The S&P 500 trades near 20 times forward earnings, above long-term averages. The Nasdaq Composite is even more expensive. Much of the optimism around technology and AI-led growth is already priced in.
And recent returns show exactly why allocations have ballooned.
US Markets vs Indian Benchmarks: The One-Year Gap
| Index / Fund Category | 1-Year Return (%) |
| NIFTY 50 | 2.10% |
| Sensex 30 | -0.08% |
| US S&P 500 | 34.89% |
| Nasdaq Composite | 50.24% |
| Dow Jones Industrial Average | 26.33% |
| US Passive Funds (Avg) | 56.52% |
| US Active Funds (Avg) | 45.23% |
| Combined US Active & Passive | 51.77% |
(Data as on April 17, 2026)
This kind of outperformance does not go unnoticed. But chasing what has already run up can be dangerous, especially when geopolitics begins to drive sentiment.
The Iran conflict has added a fresh layer of uncertainty. Historically, US equities acted as a relative safe haven during global stress. That role looks less straightforward today. Markets are reacting sharply to oil headlines, war risks, and interest-rate expectations.
That changes the risk-reward equation. Yadav believes allocations above 20 per cent are now hard to justify for most investors.
- Conservative portfolios: 5-8% US exposure is enough
- Moderate portfolios: 10-12%
- Aggressive portfolios: 15-20%, with periodic profit booking
Siddharth Maurya, Managing Director at Vibhavangal Anukulkara, takes a broader structural view. The US still accounts for 55-60 per cent of global market capitalisation. Over long periods, Indian investors also benefited from rupee depreciation boosting dollar returns.
But even Maurya expects returns to cool. He estimates US dollar returns may moderate to 7-9 per cent annually over the next five to seven years -- far below what the last year might have conditioned investors to expect. His advice is to keep exposure diversified, staggered, and within 10-20 per cent.
That is a subtle shift: from chasing returns to managing exposure.
How US Passive Funds Surged Past 55%
| Fund Name | 1-Year Return (%) |
| Aditya Birla Sun Life US Equity Passive FoF | 58.69% |
| Axis NASDAQ 100 US Specific Equity Passive FoF | 56.97% |
| ICICI Prudential NASDAQ 100 Index Fund | 58.02% |
| Invesco India - Invesco EQQQ NASDAQ100 ETF FoF | 59.14% |
| Kotak US Specific Equity Passive FoF | 58.52% |
| Mirae Asset S&P 500 Top 50 ETF FoF | 58.07% |
| Motilal Oswal Developed Market Ex US ETFs FoF | 45.56% |
| Motilal Oswal Nasdaq 100 FOF | 72.79% |
| Motilal Oswal S&P 500 Index Fund | 46.99% |
| Navi Nasdaq100 US Specific Equity Passive FoF | 58.88% |
| Navi Total Stock Market US Specific Equity Passive FoF | 48.10% |
Average (Passive): 56.52%
Active US Funds: Wide Dispersion, Still Strong Average
| Fund Name | 1-Year Return (%) |
| Bandhan US Specific Equity Active FoF | 38.45% |
| DSP US Specific Equity Omni FoF | 71.53% |
| Edelweiss US Technology Equity FoF | 54.51% |
| Edelweiss US Value Equity Offshore Fund | 35.45% |
| Franklin US Opportunities Equity Active FoF | 39.52% |
| ICICI Prudential US Bluechip Equity Fund | 34.73% |
| Nippon India US Equity Opportunities Fund | 25.60% |
| SBI US Specific Equity Active FoF | 62.02% |
Average (Active): 45.23%
Currency is another factor investors may be underestimating. A weakening rupee amplified US returns for years. If rate cycles shift or the rupee stabilises, that tailwind may fade.
There is also the valuation risk. If global rates stay higher for longer, richly valued growth stocks -- where most Indian US exposure sits -- could face pressure.
The takeaway is not that Indian investors should exit US equities because of war fears. It is that this may be the right time to review what US exposure is meant to do in the portfolio.
- If it is for long-term global diversification, the case remains intact.
- If it has become an oversized bet because returns were too good to ignore, rebalancing may be prudent.
In uncertain markets, discipline matters more than conviction. Sometimes, the smartest move is not a dramatic call, but a small reset.
