Mutual funds can resume investing in international stocks: SEBI

Capital markets regulator Securities and Exchange Board of India (SEBI) has permitted mutual funds to again invest in foreign stocks within the aggregate mandated limit of $7 billion for the industry. This came in the wake of a major correction in global markets that brought down the valuation of international stocks.

In January, SEBI had asked mutual fund houses to stop taking fresh subscriptions in schemes investing in overseas stocks. The directive to stop subscription was mainly on account of the mutual fund industry crossing the mandated limit of $7 billion for overseas investments.

The recent meltdown in global stocks reduced the cumulative value of investments made by all the mutual fund houses together.

“Mutual fund schemes may resume subscriptions and make investments in overseas funds/securities up to the headroom available without breaching the overseas investment limits as of end-of-day of February 1, 2022, at the mutual fund level,” SEBI said in a communication sent to Association of Mutual Funds in India on Friday.

Also, the regulator has asked AMFI to ensure that the total utilisation of the overseas limit by each AMC or mutual fund remains capped at the February level. The regulator’s approval came after AMFI made a request to SEBI for reviewing investment in overseas securities by mutual funds.

Meanwhile, Edelweiss Mutual Fund announced that it will be accepting inflows in its international schemes from Tuesday. The schemes are — ASEAN Equity Off-shore Fund, Greater China Equity Off-shore Fund, U. S. Technology Equity Fund of Fund, Emerging Markets Opportunities Equity Offshore Fund, Europe Dynamic Equity Offshore Fund, U. S. Value Equity Off-shore Fund and MSCI India Domestic & World Healthcare 45 Index Fund.

Following the SEBI’s direction, several fund houses, including PPFAS Mutual Fund, DSP Mutual Fund and  Edelweiss Mutual Fund, had stopped accepting inflows into their certain schemes with international mandates.

The SEBI has set an overall industry level limit of $7 billion for mutual funds to invest in overseas securities and funds and a separate limit of $1 billion for investment in overseas ETFs.