Sebi enhances overseas investment for mutual funds: 5 points
A mutual fund launching a New Fund Offer (NFO) and intending to invest overseas will be required to specify the amount it will invest outside India and use the limit specified within six months.
PremiumSebi in a circular yesterday doubled the foreign investment limit per mutual fund house to $600 million, from the existing $300 million. $50 million would be reserved for each mutual fund individually, within the overall industry limit of US $ 7 billion. Parag Parikh Long term Equity Fund, one of its kind multi cap scheme invests 28% of its total portfolio in international stocks, as on September 30. In the past few months, many mutual fund houses have launched equity schemes with some portion of the total assets allocated towards international stocks.
The changes come into force with immediate effect.
Here are the details of Sebi's circular on ' Enhancement of overseas investment limits for mutual funds':
> Mutual Funds can make overseas investments subject to a maximum of US $ 600 million per mutual fund, within the overall industry limit of US $ 7 billion. Sebi has reserved an amount of $50 million per fund house.
> Mutual Funds can invest in overseas Exchange Traded Fund (ETFs) subject to a maximum of US $ 200 million per mutual fund, within the overall industry limit of US $ 1 billion.
> A mutual fund launching a New Fund Offer (NFO) and intending to invest overseas will be required to specify the amount it will invest outside India and use the limit specified within six months.
> For existing schemes, Sebi specified a headroom of 20% of the assets under management (AUM) in the previous three months in overseas securities, for investment in foreign securities subject to the overall limit of $600 million.
> AMCs would have to report the utilization of the foreign limit to Sebi on a monthly basis, within 10 days from the end of each month.
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