SEBI, the capital markets regulator, has allowed mutual funds to re-engage in foreign equities, as long as they remain below the $7 billion limit set for the sector.
This came after a significant downturn in global markets, which sent global stock market valuations plummeting.
SEBI had urged mutual fund companies to stop raising new subscriptions in offshore equity programs in January. The mutual fund industry had exceeded the legal limit of $7 billion for offshore investments, prompting the directive to suspend subscriptions.
The recent stock market crash in the United States has lowered the total value of all mutual fund investments.
“Effective end of day February 1, 2022, at the mutual fund level, mutual funds may restart subscriptions and make investments in foreign funds/securities up to available margin without violating the overseas investment restrictions,” the regulator said. in a communication addressed to Amfi on Friday.
SEBI has also urged the Association of Mutual Funds in India (AMFI) to ensure that the overall usage of the offshore limit by each AMC or mutual fund remains at the February level. Following AMFI’s call to SEBI for a review of mutual fund investments in foreign securities, the regulator gave its approval.
Meanwhile, Edelweiss Mutual Fund has announced that from Tuesday it will accept inflows into its overseas schemes.
ASEAN Equity Off-Shore Fund, Greater China Equity Off-shore Fund, US Technology Equity Fund of Funds, Emerging Markets Opportunities Equity Off-Shore Fund, Europe Dynamic Equity Off-Shore Fund, US Value Equity Off-Shore Fund and MSCI India The index fund Domestic & World Healthcare 45 is part of the funds.
Several fund companies, including PPFAS Mutual Fund, DSP Mutual Fund and Edelweiss Mutual Fund, had stopped receiving contributions into certain schemes with overseas mandates following the Sebi directive.
SEBI has imposed an industry-wide limit of $7 billion for mutual funds to invest in foreign securities and funds, as well as a separate cap of $1 billion for investing in traded funds on the foreign exchange (ETF).