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Mutual funds have shifted their focus to international ETF fund of funds as restrictions remain on new investments in overseas index and active funds. In the last one month, three fund houses have filed papers with SEBI seeking the regulator's go-ahead to launch five ETF-based international fund of funds.
In January, SEBI had restricted mutual funds from accepting new investment in their international funds, except for those that invest in overseas ETFs. The restrictions were a result of the industry breaching the overall foreign investment limit of $7 billion. However, FoFs based on global ETFs have remained open for investment as they have a separate investment limit of $1 billion.
The fund houses who have filed papers for international ETF fund of funds are Mirae Asset, Navi and Aditya Birla Sun Life (ABSL). Mirae has applied for three funds — Artificial Intelligence & Technology ETF Fund of Fund, Global Clean Energy ETFs Fund of Fund and Cloud Computing ETFs Fund of Fund. ABSL (Blockchain & Virtual Digital Assets ETFs Fund of Fund) and Navi (Metaverse ETF Fund of Fund) have filed papers for one fund each.
However, the launches may have to wait for a while even if SEBI gives its go ahead soon. The regulator has put a ban on NFOs till the industry complies with the regulator's directive on discontinuation of pooled accounts.
