SEBI Doubles Overseas Investment Limit In Individual Based Mutual Funds

The Securities and Exchange Board of India (SEBI) has raised the limit of foreign investment for Individual Mutual Fund from $ 300 million to $ 600 million.

Sebi announced this in a circular issued on November 5, 2020, stating that each fund house can make a maximum profit of $ 600 million in foreign investment within the overall industry limit of $ 7 billion.

Rajiv Thakkar, Chief Investment Officer (CIO), PPFAS Mutual Fund, said that, if this investment limit had not been raised, some big funds could have reached the upper limit in the coming days.

The Securities and Exchange Board of India (SEBI) has issued guidelines regarding how the schemes will be allowed to use the new limits.

In the case of existing schemes, this will be allowed subject to the 20 per cent limit of the average assets held in foreign investment (ETF or equity) in the previous three months.

On the new fund offer (NFO), any scheme will be required to use the limit available within six months from the closure of the NFO otherwise this limit will become available for unused industry-wide limits.

There has been a considerable increase in the number of new schemes proposed by mutual fund houses, which give investors sufficient investment for international equity and investors have also shown interest in such funds, as these investments also give geographical diversification to their portfolio.