The Securities and Exchange Board of India (Sebi) on Thursday enhanced the overseas investment limit for mutual funds. The regulator in a circular said mutual funds can make overseas investments, subject to a maximum of $600 million per mutual fund, within the overall industry limit of $7 billion.
Mutual funds can even make investments in overseas Exchange Traded Fund (ETFs) subject to a maximum of $200 million per MF, within the overall industry limit of $1 billion. Currently, mutual funds can make overseas investments subject to a maximum of $300 million per mutual fund with an aggregate ceiling of $7 billion.
Sebi in its circular said $50 million would be reserved for each MF individually, within the overall industry limit of $7 billion. Fund houses launching new schemes, which intend to invest in overseas securities or ETFs, shall ensure that the scheme documents disclose the intended amount that they plan to invest in overseas securities or ETFs.
“Such limits disclosed in scheme documents will be valid for a period of six months from the date of closure of new fund offer (NFO). Thereafter the unutilised limit, if any, shall not be available to the mutual fund for investment in overseas securities or ETFs and shall be available towards the unutilised industry-wide limits,” said Sebi.
For all ongoing schemes that invest or are allowed to invest in overseas securities or ETFs, an investment headroom of 20% of the average assets under management (AUM) in overseas securities or ETFs of the previous three calendar months would be available to the mutual fund for that month to invest in overseas securities or ETFs.
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