Assessing SEBI decision to maintain status quo on investment limit for overseas MFs

Capital markets regulator Securities and Exchange Board of India (SEBI) has permitted mutual funds to again invest in foreign stocks within the aggregate mandated limit of $ 7 billion for the industry. This came in the wake of a major correction in global markets that brought down the valuation of international stocks.

In this latest episode of Mutual Fund Corner, CNBC-TV18’s Sumaira Abidi spoke to Manoj Nagpal, MD & CEO of Outlook Asia Capital, on SEBI’s decision to maintain status quo on investment limit for overseas mutual funds.

Nagpal said, “It is very positive that the limit has been opened up currently, though it is a short window. The twist is that global investments have always been tracked on the basis of investment at cost value. What it ultimately means is that, whatever redemptions have been made from February 1 till now in the mutual funds for every particular mutual fund, and that too at a cost basis, will be the limit that will be available to each mutual fund. Earlier the limit was $1 billion for every mutual fund, subject to the industry limit of $7 billion. What the new rules now state is that the overall limit remains the same, it is $7 billion. However, each mutual fund house’s limit is now reset to where their investment was on February 1.”