SEBI has raised the overseas investment limit of individual fund houses to 600 million USD from 300 million USD. The overall industry limit for the industry remained unchanged at 7 billion USD.
The move comes after fund houses sent a representation to SEBI to increase the limits wherever possible. Referring to the fact that not all Indian AMCs have schemes investing abroad, Neil Parikh, CEO of PPFAS Mutual Fund, had said at their annual unitholder’s meeting on October 24 that if some fund houses are not using the limit, let others use the limit.
Further, SEBI said in a circular that MFs can make investments in overseas ETFs subject to a maximum of 200 million USD per fund house, within the overall industry limit of 1 billion USD. Earlier, the overall ceiling for investment in overseas ETFs that invest in securities was 1 billion USD subject to a maximum of 50 million USD per mutual fund.
Mutual funds launching new schemes intending to invest in overseas securities / ETFs have to ensure that the scheme documents disclose the intended amount that they plan to invest. Such limits disclosed in scheme documents are valid for a period of six months from the date of closure of NFO. Thereafter the unutilized limit, if any, will not be available to the fund house for investment in overseas securities or ETFs and will be available towards the unutilized industry wide limits.
MFs need to report the utilisation of overseas investment limits on a monthly basis, within 10 days from the end of each month.
The circular comes into force with immediate effect.
