PPFAS Mutual Fund (PPFAS MF) will be reopening Parag Parikh Flexicap Fund for fresh flows from March 15.
The fund had stopped accepting fresh flows after the Securities and Exchange Board of India (SEBI) had directed fund houses not to invest additional funds in overseas stock markets, as the overseas investing limits allowed by the Reserve Bank of India (RBI) were close to getting breached.
As the overseas limits have not yet been enhanced, the fresh flows will have to be deployed towards domestic stocks. This can change the composition of Parag Parikh Flexicap Fund over time.
“For now, 28-29 percent of our scheme’s portfolio is in foreign stocks. If the limits are not enhanced and we double our AUM from Rs 20,000 crore to Rs 40,000 crore, our exposure to foreign stocks would fall to 14-15 percent,” says Neil Parikh, chief executive officer of PPFAS MF.
"Enhancing of limits could take longer than our expectations, given global uncertainty due to Russia-Ukraine war, depreciating rupee and FIIs taking money out. On the other hand, there will be investment opportunity in domestic stock markets after the recent correction that we have seen,” he added.
Also listen: Simply Save | What does restriction of flows in international schemes mean for mutual fund investors?
As a diversified equity fund that had about 65 percent of its investments in domestic stock markets and about 28 percent in international stocks (balance held in cash), Parag Parikh Flexicap Fund was allowing flows coming through existing SIPs, but investing them into just domestic stocks.
Why were the restrictions imposed?
The overall industry limit of $7 billion for investing in overseas stocks and mutual funds was close to getting exhausted.
However, few international funds in the industry did not get affected as they invested in overseas-listed exchange traded funds (ETFs).
Also read: Four international funds that are still open for overseas investments
There is a separate $1 billion limit for investing ETFs for mutual funds. Within this overall limit, SEBI rules allow $300 million (Rs 2,250 crore) per fund house to invest in overseas ETFs.
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