Many Indian funds have been investing abroad lately, mainly through the ‘Fund of Funds’. As a result, one could invest in foreign markets in the country.
Mutual funds that invest in foreign markets have stopped taking new money for the time being. The decision was taken by the mutual fund companies as the ceiling on foreign investment was set at 1 billion per fund under SEBI’s directive. However, this limit is considered to be temporary.
In Light of This Decision, Those Interested in Investing Abroad Should Keep in Mind
A) No new one-time investment will be accepted in the specified fund.
B) New systematic investment plan cannot be introduced.
C) Applications for new systematic transfer plans from other schemes will not be accepted.
However, Existing Funds Will Remain Out of its Reach
The Association of Mutual Funds of India (AMFI) on February 2 asked its members not to make new investments in such funds in the wake of a recent directive from market regulator SEBI. Amphi has taken this decision following the SEBI directive to impose an upper limit on fund-raising and overseas investment for the entire industry. However, the provision is temporary, and if the bank regulator raises the limit, the directive will be amended, the fund houses told investors. However, if the new money does not come, the investment of the funds may be lost even if it is temporary.
Incidentally, many Indian funds have been investing abroad lately, mainly through the ‘Fund of Funds’. As a result, investors were able to invest in foreign markets of their choice while staying in the country. Apart from the first world, it is also very convenient to invest in Greater China or Asia Pacific market today. There are also multiple index-based options.
An example is the Motilal Oswal S&P 500 Fund. The world-famous index has been very popular for a long time. Motilal Aswal’s scheme invests in Indian customers.
The company has informed investors that a total of five of its funds will no longer accept new money in the wake of Amfi’s recent directives. According to the information available so far, fund management companies like Invesco, Franklin Templeton, etc. have sent a list of investment projects to their clients. At the same time, citing SEBI guidelines, they have informed that investment in their respective projects will be suspended temporarily.
