Baroda BNP Paribas Aqua FoF invests in an open-ended Fund of Fund scheme investing in BNP Paribas Funds Aqua (Lux), and the primary investment objective of the Scheme is to seek capital appreciation by investing predominantly in units of BNP Paribas Funds Aqua (Lux).
Launched on May 7, 2021, the fund is not rated or unrated by either Value Research or Morningstar.
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Should investors invest just because it’s the only international fund open?
Shivam Pathak, CFP and Founder of Asset Elixir, told ETMutualFunds that the fund remains open as it has sufficient overseas investment capacity as per the regulatory limits. Investors should not invest just because it is available, as it is a thematic fund and should be considered only if it fits their portfolio, risk appetite, and long-term investment goals.
Last week, Edelweiss Mutual Fund said it is nearing the overseas investment limit allowed for mutual funds under the industry-wide cap introduced on February 1, 2022. As a result, it has stopped accepting fresh SIPs and other investments in select international funds. PGIM India Mutual Fund and Franklin Templeton Mutual Fund also suspended fresh investments in some of their international schemes after approaching the same regulatory limit.
These restrictions are a result of SEBI‘s overseas investment limits for mutual funds. Indian mutual funds operate under an industry-wide overseas investment cap, and once fund houses approach these limits, they temporarily stop accepting fresh inflows into international schemes until investment headroom becomes available.
In February 2022, the regulator asked fund houses to stop accepting fresh investments in international schemes after the industry-wide overseas investment limit was exhausted. Since then, most fund houses have either suspended lumpsum investments, SIPs, or both in their international mutual fund schemes.
How did the fund perform across horizons?
Based on the yearly returns since 2022 or calendar year returns since 2022, the fund delivered negative returns in 2022 only. In 2022, the fund lost 14.13%. In 2023, 2024 and 2025, the fund delivered 20.74%, 1.24% in 2024 and 17.97% in 2025.
Since its inception, the fund has delivered a CAGR of 9.42% (Source: Fund house website).
As the details of the benchmark were not available in the ACE MF database, the performance of the fund cannot be determined against its benchmark and category average.
SIP and lumpsum investments
If an investor made a monthly SIP of Rs 10,000 in this fund at the time of its inception, the current value would have been Rs 8.63 lakh in 5 years with an XIRR of 12.78%. The same monthly investment made three years ago would have been Rs 4.51 lakh with an XIRR of 15.49%.
A lumpsum investment made in the fund of Rs 1 lakh at the time of its inception would have been Rs 1.57 lakh with a CAGR of 9.14%. If the same investment was made three years ago, the value would have been Rs 1.43 lakh with a CAGR of 12.84%.
What’s behind the fund’s five-year SIP performance?
Pathak said that the fund has benefited from the long-term growth in global water infrastructure and environmental solutions, along with the depreciation of the rupee over the period and being a thematic fund, its performance has also been driven by global sustainability trends.
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The availability of just one international fund for fresh SIPs and lumpsum investments highlights the limited avenues currently available for investors seeking global diversification through mutual funds. Until regulators revise the overseas investment limits or additional headroom becomes available, access to international mutual funds is expected to remain restricted.
Alternatives for international exposure
As access to international mutual funds remains restricted in some cases, investors are exploring other ways to gain overseas exposure. So are there any alternatives through which investors can gain international exposure?
Pathak said that the overseas investment cap has limited fresh investments and new fund launches, restricting investors’ access to international markets and investors looking for global diversification can consider international ETFs through the LRS route or wait for investment limits to reopen.
There are other possible options for global exposure, which include the LRS route and GIFT City, leaving investors confused about which one to pick for investment in case the limits are not increased.
ETMutualFunds analysed the other key ratios of the fund in a three-year period. Based on the last three years, the scheme has offered a Treynor ratio of 1.68 and an alpha of 0.65. The Sortino ratio of the scheme was recorded at 0.43.
The return due to net selectivity was recorded at 0.33, and the return due to improper diversification was recorded at 0.32 in the last three years.
According to the scheme information document (SID), the fund invests 95-100% in Units of BNP Paribas Funds Aqua (Lux) and 0-5% in money market instruments and/or units of mutual funds. The fund holds 96.37% in BNP Paribas Funds SICAV – Aqua, and 3.63% is invested in TREPS, cash & other net current assets. As of June 2026, the fund had an AUM of Rs 50.39 crore.
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Other overseas mutual funds
Around 38 international funds have completed five years of existence, including Baroda BNP Paribas Aqua FoF. Among these funds, Mirae Asset NYSE FANG+ETF FoF delivered the highest return of around 28.87% in the last five years, followed by Motilal Oswal Nasdaq 100 FoF, which gave 23.44%.
PGIM India Emerging Markets Equity FoF delivered the lowest return in the last five years of around 2.22%.
Global investing: What’s next?
Pathak said that the long-term outlook for global equities remains constructive and the US is likely to continue benefiting from AI and technology-led growth, while Europe and parts of Asia offer attractive valuation opportunities.
He further said that a diversified global allocation can help reduce concentration risk and strengthen long-term portfolios.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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