• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest
• The New Manager

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources

Group Sites

• The Hindu
• Business Line
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Veena Venugopal

Mumbai , Feb. 28

Mutual funds now have better access to global markets. The Union Finance Minister, Mr. P Chidambaram, has unshackled mutual fund investments in foreign equities from the restriction they previously had.

The ceiling on investment by mutual funds in overseas instruments has been raised from $1 billion to $2 billion. A limited number of qualified mutual funds are also now allowed to collectively invest up to $1 billion in overseas exchange traded funds.

Earlier, MFs were allowed to invest only in those companies that have a listed subsidiary in India and where the global parent owned at least 10 per cent of the listed Indian subsidiary. This requirement of 10 per cent reciprocal share holding has now been removed. Currently, Principal PNB Asset Management Company runs a global opportunities fund with assets under management of Rs 16 crore.

With the now expanded investment universe of these funds, other fund houses are also considering launching similar funds. "Fund houses would now look at this product, though earlier experience has not been outstanding," said Mr Ved Prakash Chaturvedi, Managing Director, Tata Asset Management Ltd. With the earlier rule, very few global companies qualified for investments by mutual funds.

Good global stocks, especially in technology and similar sectors, were outside the scope of Indian mutual funds, as these largely do not have listed Indian subsidiaries.

Now that this rule is altered, global funds would become more attractive, said the head of marketing of a large fund house. Also, because of the current high valuations in the emerging markets, the time is getting right for funds that invest in large global companies, he added.

"Principal Global Opportunities Fund has posted returns of 28 per cent since its inception. This fund is an opportunity for investors to diversify their portfolio outside of Indian debt and equity markets," said Mr. Rajat Jain, Chief Investment Officer, Principal PNB AMC.

Fund houses are also initiating research on offering successful exchange traded funds in India, post today's Budget announcement.

More Stories on : Mutual Funds | Budget | Overseas Investments

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Investors will gain, feels Fidelity MF

Copyright © 2006, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line