SEBI permits mutual funds to resume investing in international companies

view original post

SEBI, the capital markets regulator, has allowed mutual funds to engage in foreign equities again, as long as they stay below the $7 billion limit set for the sector.

This came after a significant downturn in global markets, which caused worldwide stock valuations to plummet.

SEBI had urged mutual fund firms to halt collecting new subscriptions in offshore equity schemes in January. The mutual fund industry had exceeded the legal limit of USD 7 billion for offshore investments, prompting the directive to halt subscriptions.

The recent stock market crash in the United States has lowered the total value of all mutual fund investments.

“As of end-of-day on February 1, 2022, at the mutual fund level, mutual fund schemes may restart subscriptions and make investments in overseas funds/securities up to the headroom available without breaking the overseas investment restrictions,” the regulator stated in a communication addressed to Amfi on Friday.

SEBI has also urged the Association of Mutual Funds in India (AMFI) to ensure that each AMC’s or mutual fund’s overall use of the overseas limit remains at the February level. Following AMFI’s appeal to SEBI for a review of mutual funds’ investment in overseas securities, the regulator gave its approval.

Meanwhile, Edelweiss Mutual Fund has announced that beginning Tuesday, it will accept inflows into its overseas schemes.

ASEAN Equity Off-Shore Fund, Greater China Equity Off-shore Fund, US Technology Equity Fund of Funds, Emerging Markets Opportunities Equity Off-Shore Fund, Europe Dynamic Equity Off-Shore Fund, US Value Equity Off-Shore Fund, and MSCI India Domestic & World Healthcare 45 Index Fund are among the funds.

Several fund companies, including PPFAS Mutual Fund, DSP Mutual Fund, and Edelweiss Mutual Fund, had halted taking inflows into certain schemes with overseas mandates as a result of the Sebi’s directive.

SEBI has imposed a USD 7 billion industry-wide limit for mutual funds to invest in foreign securities and funds, as well as a separate USD 1 billion cap for investing in overseas exchange-traded funds (ETFs).