Mutual funds can start accepting new investments in their foreign investment schemes

22 Jun 2022 , 10:15 AM

Mutual funds can start accepting new investments and subscriptions in their foreign investment schemes, if there is headroom available below the upper limit on these investments.

Mutual funds are only permitted to invest in foreign securities up to a total of $7 billion at the industry level and a maximum of $1 billion per plan, according to SEBI.

Mutual funds “may use the headroom available in the overseas investment limit owing to redemptions and subsequent sale of overseas assets after February 1, 2022,” according to a letter from the industry group Association of Mutual Funds in India (AMFI) to fund houses.

Effectively, the investment cap has not been raised, but fund firms are now permitted to invest up to the number of overseas stocks they have sold since February 1.

Mutual fund headroom is constrained

Because they wouldn’t have sold foreign shares, industry officials claim that not all schemes will be allowed to reopen their funds. And some could only have a little amount of space accessible because there haven’t been many strong redemption pushes and consequently few sales.

International schemes will once again be open, although with some limitations, according to Mirae Mutual Fund. Existing or new SIP investments are not permitted. Only new lump sum investments up to Rs 2 Lakh per day, per investor, per plan, will be permitted.