SEBI allows mutual funds to resume investing in foreign stocks
In January, the Securities and Exchange Board of India (SEBI) has told mutual funds to stop further investments in foreign stocks. It has now allowed mutual funds to resume investing in international stocks, in backdrop of a correction in global markets.
The Securities and Exchange Board of India (SEBI) has allowed mutual funds to resume investing in foreign stocks within USD 7 billion, which is the aggregate mandated limit for the industry.
The capital markets regulator's decision comes in the backdrop of a correction in global markets that brought down the international stocks' valuation.
In January, SEBI had told mutual fund houses to stop taking new subscriptions in schemes that were investing in overseas stocks. The directive was mainly due to the mutual fund industry crossing the mandated USD 7 billion limit for overseas investments. The latest meltdown in global stocks reduced the cumulative value of investments made by all the mutual fund houses together.
"Mutual fund schemes may resume subscriptions and make investments in overseas funds/securities up to the headroom available without breaching the overseas investment limits as of end-of-day of February 1, 2022, at the mutual fund-level," SEBI told the Association of Mutual Funds in India (Amfi) on Friday. The regulator has also asked Amfi to ensure that the total utilisation of the overseas limit by each AMC or mutual fund remains capped at the February-level.
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The regulator's approval came after Amfi made a request to SEBI for reviewing investment in overseas securities by mutual funds. Meanwhile, Edelweiss Mutual Fund announced that it will be accepting inflows in its international schemes from Tuesday. The schemes are — 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.
Following the SEBI's previous direction, several fund houses, including PPFAS Mutual Fund, DSP Mutual Fund and Edelweiss Mutual Fund, had stopped accepting inflows into their certain schemes with international mandates. The markets regulator has set an overall industry-level limit of USD 7 billion for mutual funds to invest in overseas securities and funds and a separate limit of USD 1 billion for investment in overseas ETFs.
With PTI inputs
First Published: Jun 21, 2022 1:16 PM IST
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