Mutual funds allowed to resume investing in international stocks

The capital markets regulator, the Securities and Exchange Board of India (SEBI) has allowed mutual funds (MFs) to reinvest in international equities within the total mandatory limit of $7 billion for the sector.

In January, the regulator had asked mutual fund houses to stop taking new subscriptions to programs that invest in foreign stocks. The directive to suspend subscriptions was primarily the result of the mutual fund industry breaking the mandatory $7 billion limit for foreign investment. Following the Sebi directive, the Association of Mutual Funds in India had asked fund houses to stop accepting money flows in schemes investing abroad from February.

The recent collapse in global stock markets has reduced the cumulative value of all mutual fund investments combined and the approval comes after AMFI requested SEBI to review the MF’s investments in foreign securities.

“Investment funds may resume subscriptions and make investments in foreign funds/securities up to the available space without exceeding overseas investment limits from the end of the day of February 1, 2022, at the mutual fund level,” SEBI said in a press release. last week to AMFI, which asked to ensure that each AMC’s overall usage of the overseas limit remains at February levels.

A mutual fund that is launching a new scheme and intends to invest abroad must specify the amount it will invest outside of India. Following Sebi’s instructions, several fund houses such as PPFAS Mutual Fund, DSP Mutual Fund and Edelweiss Mutual Fund had stopped accepting inflows into their certain arrangements with international mandates.

Under the rules, domestic mutual funds can invest up to $7 billion in foreign stocks and another $1 billion in exchange-traded funds (ETF).

Meanwhile, Edelweiss Mutual Fund has announced that it will accept inflows into its international arrangements from Tuesday. The schemes include ASEAN Equity Off-shore Fund, Greater China Equity Off-shore Fund, US Technology Equity Fund of Fund, Emerging Markets Opportunities Equity Offshore Fund, Europe Dynamic Equity Offshore Fund, US Value Equity Off-shore Fund and MSCI India Domestic & World Healthcare 45 Index Fund.

(With inputs from PTI)

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