Markets

Motilal Oswal suspends lump sum investment in 3 overseas funds

Badrinarayanan K S 5367 | Updated on: Jan 17, 2022

Will allow inflow in S&P 500 Index Fund, MSCI EAFE Top 100 Select Index, Nasdaq 100 FOF only if SEBI raises investment ceiling

Motilal Oswal Asset Management Company has suspended lump sum investment and switch-ins in three of its overseas funds – S&P 500 Index Fund, MSCI EAFE Top 100 Select Index and Nasdaq 100 Fund of Fund from Monday.

The suspension of fresh investment in these schemes will continue till further enhancement of investment limit by the regulator, said the fund house.

Application for lump sum investment and switch-in received post the cut-off on January 14 will not be processed, it said.

Redemption to continue

However, the restriction on investment will not be applicable to redemption, switch-out and systematic withdrawal plan in these schemes, it added.

Motilal Oswal Nasdaq 100 FoF and ETF have asset under management of ₹4,471 crore and ₹6,273 crore while S&P 500 Index Fund has corpus of ₹2,737 crore. Launched last December, Motilal Oswal MSCI EAF (Europe, Australia and Far East) top 100 Select Index have asset of ₹39 crore.

Investment threshold

Last June, capital market regulator SEBI enhanced the overseas investment limit for a mutual fund house to $1 billion from $600 million and capped the overall mutual fund industry limit at $7 billion to facilitate fund houses allocate higher share of their corpus for foreign securities.

Further, mutual funds can make investments in overseas Exchange Traded Fund subject to a maximum of $300 million per mutual fund, within the overall industry limit of $1 billion. Earlier, the investment limit was $200 million per fund house.

Mutual funds can either build a portfolio of foreign stocks directly or route investment through any other overseas funds that invest in global markets. This apart, they also have option to ape a particular global index through exchange traded fund.

Buoyed by the economic stimulus and near zero per cent interest rate, the global stock markets have registered a double digit growth for third consecutive year in 2021, said Satish Ramakrishnan, an independent MF distributor.

Besides part of diversification, investors have joined the bandwagon of investing in global markets as the noise over India markets turning overvalued getting louder, he added.

While Nasdaq and S&P 500 have gained 27 per cent last year, the collective fortune of the world’s top 500 richest people have zoomed by over $1 trillion on the back of soaring equity market and rising valuations.

Published on January 17, 2022

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