Listen to this article
SEBI has allowed mutual funds to buy international stocks again, provided their total international AUM remains below what it was on February 1, 2022, sources told Cafemutual.
"Mutual fund schemes may resume subscriptions and make investments in overseas funds/securities upto the headroom available without breaching the overseas investment limits as of end-of-day of February 1, 2022 at mutual fund level," SEBI has said in a communication sent to AMFI.
This means that mutual funds can now accept inflows in international funds and deploy their corpus in overseas securities till their international AUM reaches the February 1, 2022 level. The international AUM of mutual funds are now much lower compared to February 1, thanks to a major correction in international markets.
Explaining the SEBI directive, a CEO of one of the AMCs said, "Consider an AMC had an international AUM of Rs. 1,000 on February 1, 2022 and that it now stands at Rs. 600 due to the correction. The AMC now has the permission to invest in international stocks until its AUM again reaches Rs. 1,000," he said.
Edelweiss MF has announced that it will accepting inflows in its international schemes from Tuesday. The schemes include ASEAN Equity Off-shore Fund, Greater China Equity Off-shore Fund, US Technonogy Equity Fund, Emerging Markets Opportunities Equity Offshore Fund, Europe Dynamic Equity Offshore Fund, US Value Equity Off-shore Fund and MSCI India Domestic & World Healthcare 45 Index Fund.
At the end of January 2022, SEBI had asked mutual funds to stop accepting fresh inflows in international funds as the industry had utilised the full $7 billion international investment permit. The industry, which has since been waiting for the RBI to raise the limit, now has some room to gather international investment.
