Many fund houses like Edelweiss Mutual Fund and Kotak Mutual Fund have temporarily suspended subscriptions to their international fund schemes. This has been done in order to avoid the breach of the limit as mandated by SEBI.
However, Shalini Dhawan, Co-Founder & Director at Plan Ahead Wealth Advisors in an interview with CNBC-TV18 said that Indian investors should look at geographical diversification of their investment as and when the schemes re-open.
“For investors sitting in India, geographical diversification is something that they need to look at and therefore there is merit in looking at international investments. There are many ways now to invest internationally. A lot of mutual fund houses do have ETFs, index funds and funds of funds for investing internationally," Dhawan said.
She added that currently, most international markets are near their long-term averages and so might be attractive for many investors.
"Right now it is a good time to invest internationally as many of the emerging and developed markets are at their long-term averages and therefore from a risk-reward perspective it may be attractive for investors to look at these markets,” Dhawan said.
In 2022, the Securities and Exchanges Board of India (SEBI) asked Indian fund houses to stop investing in stocks and bonds on international exchanges as the industry reached the mandated limit. Following Sebi's direction, several mutual fund houses stopped accepting inflows into their international schemes.
Later in June, Sebi allowed subscriptions to resume within the restricted limits after AMFI made a request for reviewing investment in overseas securities by mutual funds.
Also Read: Kotak Nasdaq Fund of Fund suspends subscription from today — existing SIPs to pause from March 1
Sebi had specified an overall industry-level limit of $7 billion for mutual funds to invest in overseas securities and funds and a separate limit of $1 billion for investing in overseas ETFs in January 2022.
Dhawan also spoke about the advantages of investing through ETFs.
Watch video for entire discussion.
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