FY26 was remarkable for mutual fund investors, with several schemes delivering impressive returns despite market volatility. Among them, Nippon India Taiwan Equity Fund emerged as the top performer, winning the FY26 mutual fund title with a staggering return of over 171%.
Market experts say this strong performance is largely due to Taiwan’s technology and semiconductor cycle.
Vishal Dhawan, Founder and CEO, Plan Ahead Wealth Advisorstold ETMutualFunds that this program is very concentrated, with information technology making up around 75% of the portfolio and TSMC alone around 30%, alongside other chip and electronics companies such as Hon Hai, MediaTek and Delta. The fund is also heavily weighted toward growth, momentum, quality, and large-cap stocks, which have benefited significantly during the recent rally led by AI and semiconductors.
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Additionally, businesses across the world are increasing their IT spending, with an increasing share of this spending directed towards artificial intelligence, which has supported the growth prospects of this segment. However, this scheme, due to its highly concentrated nature, is suitable for investors with high risk tolerance, Dhawan added.
Manish Kothari, CEO and co-founder of ZFunds, shared with ETMutualFunds that the Taiwan Stock Exchange the gathering was led by Taiwan Semiconductor Manufacturing Company (TSMC) after a 20% stock market crash in April 2025 following Trump’s announcement of 32% tariffs. During this period, SIP investors accumulated cheaper units before a 40% rally significantly boosted these returns.
What the fund house saysRajesh Jayaraman, Product Manager, Nippon India Mutual Fundshared with ETMutualFunds that the outperformance of Taiwanese stocks can be attributed to the global AI boom that is driving demand for Taiwanese semiconductors. Taiwanese technology is deeply embedded in the global AI supply chain, and the combination of accelerated investments from cloud service providers and specification-based upgrades has created strong demand.
However, current geopolitical risks, along with high valuations, could lead to higher volatility in the near term. Further, with markets largely skewed towards the technology theme, investors can consider regular investments through the systematic route with a long-term view, Jayaraman added.
The primary investment objective of the Nippon India Taiwan Equity Fund is to provide long-term capital appreciation to investors by investing primarily in equity and equity-related securities of companies listed on the recognized stock exchanges of Taiwan, and the secondary objective is to generate consistent returns by investing in debt and money market securities of India.
As per the latest available data, the Nippon India Taiwan Equity Fund had assets under management of Rs 519 crore as on February 28, 2026. Launched in December 2021, the program is managed by Kinjal Desai.
How the investments took placeFor a monthly SIP of Rs 10,000 made from April 1, 2025, the current value of the investment would have been Rs 2.17 lakh, with an XIRR of 182.81%.
A lump sum investment of Rs 1 lakh made on April 1, 2025 would have been Rs 2.70 lakh, with a CAGR of 170.78%.
What to do with investments in this fund?Kothari said the fund generated exceptionally strong one-year returns (100%+) relative to its peers, driven by Taiwan stocks and sector-specific gains. However, it also carries very high risk and a relatively higher expense ratio than many global funds.
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Investors should avoid chasing past performance and use this fund as part of a diversified global allocation, not as a core portfolio component. If you already own it, consider taking profits gradually or rebalancing it if its weight in your total portfolio has become too large, rather than exiting it all at once. Pursue systematic investment (SIP), he added.
Dhawan said the fund has returned over 100% in the last one year, while the benchmark index has given a return of 73%. Also over the three-year period, the fund significantly outperformed the benchmark index. However, the fund is a single-country, high-volatility, high-concentration strategy, so a very strong phase can be followed by equally sharp swings if the macroeconomic cycle or earnings are not favorable.
For existing investors, the most reasonable position is generally to treat this allocation as a satellite allocation and not as a core portfolio security. If the recent rally has caused this portion of the portfolio to be much larger than initially expected, rebalancing makes more sense than an aggressive addition. The key is to continue only if the initial argument was long-term international diversification with high risk tolerance, not chasing short-term momentum, Dhawan added.
The assets under management (AUM) of the scheme jumped 88% in FY26, from Rs 276 crore in April 2025 to Rs 519 crore in February 2026 (latest available data).
In 2025, the NAV of the regular plan of the scheme increased from Rs 9.6581 on April 1, 2025 to Rs 26.1530 as of March 27, 2026. Meanwhile, the NAV of the direct plan increased from Rs 10.1422 to Rs 27.8439 as of March 27, 2026.
There were nearly 570 equity funds in the said financial year, among which international funds topped the list. These international funds generated returns between 22.43% and 86.60% in FY26.
So, is it time to make yourself known internationally?Dhawan said international exposure still makes sense, but more as a strategic diversification decision than a tactical bet on the market that has just seen the best results over shorter periods.
The current global context is mixed. If savings were to be prioritized, they could be considered in layers. The US still appears to be the most natural core international exposure, while emerging markets offer valuation comfort relative to the US. A better framework could be to keep the core global allocation diversified across developed and emerging markets, with country-specific exposures such as the US, Europe, China, Taiwan and Japan as part of this mix, Dhawan added.
Kothari said global diversification remains strategically important, as foreign markets offer additional growth engines and operate in different economic cycles. Keeping the international allocation between 10 and 20 percent of your stock portfolio generally works well for long-term goals. Prioritize broader, diversified global funds rather than concentrated bets on a single country.
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To this, Jayaraman said international funds offer the benefit of diversification and hence some allocation can be considered based on risk appetite. However, each international market is different and therefore the selection of the strategy must be made after studying it.
(Disclaimer: The recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times.)
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