In this article, we will be discussing one of the International Mutual Fund in which an investor can invest now. Recently, in early February 2022, the Securities and Exchange Board of India applied restrictions on foreign investment including lump sum and SIP investments in Foreign-based Mutual Funds as well, as there is a limit of $7 billion for investment in overseas funds and securities for the mutual fund industry. And Now, on 17th June 2022, SEBI has released notification regarding this foreign investment via Mutual Fund. So, let’s discuss this topic in this article as we move ahead.
Restriction and Re-Initiation of Investment in Foreign Securities by Mutual Fund Houses:
- On February 1, SEBI notified all the mutual fund houses to stop investments in foreign stocks and funds, and thereby Mutual Fund houses who were investing in foreign securities stopped accepting Systematic Investment Plan (SIP) or Lumpsum amount on their foreign securities based mutual funds.
- The Upper Cap of investing in the overseas fund was up to $7 billion, set by the Reserve Bank of India (RBI).
- Now as per the latest notification of SEBI, Mutual Fund houses have started accepting deposits on their foreign securities-based mutual funds, but the investment limit of $7 billion remains unchanged.
- The Change in the latest notification by SEBI is that it has asked the Mutual Fund housed to cover up the amount withdrawn from the funds with the fresh deposits. For Example, if a fund with a size of Rs. 100 Cr., there is the redemption of Rs. 20 Cr. post the notification of restriction in overseas funds, then fresh investments up to Rs. 20 Cr. can be accepted.
- Also, the fresh investment must not exceed the actual Asset Under Management (AUM) size of the Fund, i.e., Rs. 100 Cr. in the case of the above example.
Overseas Funds Which Have Started Accepting Investments:
- DSP Mutual Fund: This fund has started accepting investments for investment into the overseas fund with effect from 21st June 2022.
- Mirae Asset NYSE FANG+ ETF FoF, Mirae Asset S&P 500 Top 50 ETF FoF, and Mirae Asset Hang Seng TECH ETF FoF: These funds have started accepting lump sum transactions of a maximum of RS. 2 Lakh per day per investor per scheme since the 27th June 2022.
- Nippon India US Equity Opportunities, Nippon India Japan Equity, Nippon India Taiwan Equity, Nippon India Multi-Asset, and Nippon Indian Hang Seng BeEs: These funds of Nippon India Mutual Fund House have also started lumpsum investment, switch-ins, and fresh registration of SIP/STP with effect from 22nd June 2022.
- ICICI Pru US Bluechip Equity, ICICI Pru Global Stable Equity, ICICI Pru Global Advantage, ICICI Pru NASDAQ 100, and ICICI Pru Strategic Metal and Energy-Equity: These funds from ICICI Mutual Fund has started lumpsum investment, switch-ins, and fresh registration of SIP/STP with effect from 22nd June 2022.
- Franklin Indian Asian Equity, Franklin India Feeder-Franklin U.S. Opportunities, and Franklin India Feeder-Templeton European Opportunities: These funds from Franklin India Mutual Fund house has started accepting investments in existing SIP/STP/TDICW Installments with a date effective from 21st June 2022.
- IDFC US Equity: This Mutual Fund has started accepting investments in Lumpsum, switch-ins, fresh registrations in SIP/STP and existing installments of Systematic Investments/Transfer Plans with effect from 22nd June 2022.
- Edelweiss ASEAN Equity Off-Shore, Edelweiss Greater China Equity Off-Shore, Edelweiss US Technology Equity, Edelweiss Emerging Markets Opportunities Equity Offshore, Edelweiss Europe Dynamic Equity Offshore, Edelweiss US Value Equity Offshore, and Edelweiss MSCI India Domestic & World Healthcare 45: These funds from Edelweiss Mutual Fund house has started accepting investments in existing SIP/STP/TDICW Installments with date effective from 21st June 2022.
- Aditya Birla Sun Life Global Excellence Equity, Aditya Birla Sun LifeG Global Emerging Opportunities, and Aditya Birla Sun Life International Equity Fund- Plan-A: These funds of Aditya Birla Sun Life Mutual Fund have started accepting fresh subscriptions and switch-ins including systematic transactions with date effective from 21st June 2022.
- Barod BNP Paribas Funds Aqua: This mutual fund has started accepting investments in lumpsum/switch-ins, and fresh registrations of SIP/STP effective from 22nd June 2022.
- PGIM India Global Equity Opportunities, PGIM India Emerging Markets Equity, and PGIM India Global Select Real Estate Securities: These funds from PGIM Mutual Fund house have started accepting investments in the overseas funds from 21st June 2022 in the lump sum and systematic registrations including SIP/STP.
Overseas Funds Which Have Not Started Accepting Investments:
- Parag Parekh Flexi Cap Fund: There is no such redemption from this fund. The fund will continue to invest in Indian Markets and is not investing in Foreign Securities. The Fund is having 25%-30% allocation in the US Stocks. The fund will invest in foreign securities only when the Overseas fund limit is being revised.
Why Investors can invest in the NASDAQ 100 Fund of Kotak and Navi and not in Motilal Oswal NASDAQ 100?
- There is an overall limit of $7 billion for the overseas mutual fund if the fund is purchasing direct stocks of foreign securities. While there is an additional limit of $1 billion for investment in foreign Exchange Traded Fund (ETFs).
- Now Motilal Oswal NASDAQ 100 directly purchases the foreign stocks and manages them, the limit of $7 billion is applicable on this fund, while Kotak and Navi NASDAQ 100 FoF enjoys the benefit of an additional $1 billion limit, as they purchase foreign ETFs.
What Should Investors Do?
Currently, the international funds available in India are the best way for retail investors to allocate some of their funds to foreign stocks for diversification purposes. Now, many overseas funds have started accepting investments again after the ban by SEBI on fresh investment imposed in early February, and hence investors can now choose the international mutual funds to invest in. Do follow due diligence before making any investment decision.
Disclaimer: The information here is provided for reference purposes only and should not be misconstrued as investment advice. Under no circumstances does this information represent are commendation to buy or sell stocks or MF.