BackDSP limits underlying funds in Global Innovation FoF on Sebi’s advice
In June last year, Sebi had enhanced the overseas investment limit for an individual mutual fund house to $1 billion, up from $600 million. The industry-wide cap for investing abroad was kept unchanged at $7 billion at that point
PremiumNEW DELHI: Asset management company DSP Investment Managers on Monday said it has reduced the number of underlying funds in its DSP Global Innovation Fund of Fund for now after the markets regulator asked that it should initially invest only in overseas exchange-traded funds (ETFs) until the international investment limit for the industry is increased.
The new fund offer for DSP Global Innovation Fund of Fund (DSP GIF) was launched on 24 January and will close on 7 February.
The Securities and Exchange Board of India (Sebi) has specified an overall industry level limit of $7 billion for mutual funds to invest in overseas securities and mutual funds and a separate limit of $1 billion for invest in overseas ETFs.
As per the fund house, while the ETFs limit is still some distance away, other international strategies have seen healthy flows and the limit of $7 billion could get exhausted soon.
The original design of DSP Global Innovation Fund of Fund (DSP GIF) was to invest 30% in two international ETFs and 70% in four active international funds.
However, until the limit of $7 billion is enhanced, DSP GIF will begin by investing 50% each in two passive funds - iShares PHLX Semiconductor ETF and iShares NASDAQ 100 UCITS ETF.
“Once the overseas investment limit for the Indian mutual fund industry ($7 billion) is enhanced, this fund also proposes to invest in unique active strategies like BlueBox Global Technology Fund, Nikko AM ARK Disruptive Innovation Fund, Morgan Stanley US Insight Fund & BGF World Technology Fund and other overseas fund with Innovation theme," DSP Investment Managers said in a release.
As per the fund house, these funds include emerging innovation themes such as metaverse, semiconductors, blockchain, 5G, gene technology, artificial intelligence, space exploration, electric vehicles and robotics, among others. There are very limited opportunities in the Indian listed space to participate in these emerging sectors, it said.
Driven by the surge in US-based technology companies, Indian investing overseas has surged in the recent past.
Motilal Oswal Asset Management Co. recently suspended lump sum investments and switch-in of money into its S&P 500 Index Fund, Nasdaq Fund of Funds (FoF), and Motilal Oswal EAFE Top 100 Select Index Fund after it neared individual fund house level limit of $1 billion investment in foreign stocks.
In June last year, Sebi had enhanced the overseas investment limit for an individual mutual fund house to $1 billion, up from $600 million. The industry-wide cap for investing abroad was kept unchanged at $7 billion at that point.
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