Amid rising interest of investors in international markets, the Indian mutual fund industry has suffered a setback. SEBI has asked mutual funds to stop taking fresh investments in funds with international exposure.
AMFI, through an advisory, asked AMCs to “not make any incremental investments in overseas funds or securities beyond what is existing as on February 1, 2022 at respective mutual fund levels”.
Following the advisory, PPFAS MF on Sunday issued a statement that it will stop taking lumpsum investments and registration of SIPs in its flexicap fund from February 2. Mirae Asset MF will also halt lumpsum investments and registration of SIPs in all its international funds including ETFs. However, the units of ETFs will continue to trade on stock exchanges.
Motilal Oswal MF has also stopped lumpsum investments in its overseas schemes.
Why has SEBI asked MFs to restrict inflows?
The regulator has advised mutual funds to stop further investments into foreign stocks to avoid breach of industry-wide overseas limits, which stands at $7 billion for the industry and $1 billion at the fund house level.
Have all mutual funds stopped taking fresh investments?
Till now, only three mutual funds have put restrictions — Mirae Asset MF, PPFAS MF and Motilal Oswal MF.
DSP MF has brought a change to the investment plan of its recently launched fund. The Global Innovation Fund of Fund, which was to invest in a mix of four active funds and two ETFs, will now invest only in ETFs till the limit is enhanced.
No mutual fund has put restrictions on investments in existing SIPs.
What is the stand of other mutual funds?
Most other mutual funds are waiting for further fine print from AMFI to comply with the order. Some fund houses say they are delaying the decision as they expect the limits to be raised soon.
If all MFs comply with the order, will there be no international MF options for investors?
The present SEBI order is not applicable on ETFs. So investors will still have few options for taking international exposure through mutual funds.
