Managing the portfolio of foreign portfolio investors (FPI) just got easier for domestic mutual fund houses with the capital market regulator SEBI allowing them to manage or advise funds from Category I FPIs.

Lifts 20-25 rule

The Securities and Exchange Board of India also relaxed norms relating to FPIs, doing away with the 20-25 rule which pegs the minimum number of investors in a scheme at 20 and the maximum investment by any entity in a scheme at 25 per cent while notifying the mutual fund regulations on Wednesday. Category I covers government and government-related investors, such as central banks, government agencies, sovereign wealth funds and international or multilateral organisations.

Currently, domestic fund manager are allowed to manage offshore funds only if the investment objective and asset allocation are the same and the portfolio is replicated at least 70 per cent in both the funds managed by that fund manager. Else, a separate fund manager has to be appointed.

In addition, the offshore fund has to be broad-based, that is, it should have at least twenty investors and no single investor accounting for more than 25 per cent of the fund.