SEBI enhances foreign investment limit for mutual funds to $1 billion

Representative image

With international diversification getting more recognition, and investor flows moving into such mutual fund (MF) schemes, the market regulator Securities and Exchange Board of India (SEBI) has now increased the overseas investment limit to $1 billion.

Steady increase in limits

In November, 2020, SEBI had doubled this limit to $600 million from $300 million for each fund house. However, SEBI has not changed the overall limit for the mutual fund industry, and kept it at $7 billion.

“Inflows into international schemes have increased quite a bit. Even when the limits were increased last year, some fund houses were apparently close to the enhanced limits,” says Rajeev Thakkar, chief investment officer, at PPFAS MF.

The new circular states that each mutual fund can make investments in overseas exchange traded funds (ETFs) of up to $300 million, but within the overall MF industry limit of $1 billion.

Fund houses have been rolling out several funds that invest in international markets, recently .

Some of the recent fund launches include Edelweiss MSCI India Domestic & World Healthcare 45 Index Fund, SBI International Access US Equity – FoF, Axis Global Innovation Fund of Fund and HSBC Global Equity Climate Change Fund of Fund.