Nippon MF suspends inflow into overseas funds again

Suresh P. Iyengar | | Updated on: Jun 29, 2022

Suspension comes within a week of the fund house resuming subscription in overseas securities

Nippon India Mutual Fund has suspended inflows into five of its schemes investing in the international markets within one week after reopening it.

Other fund houses, which had opened up investment in overseas schemes, may also follow suit given renewed investors’ interest in these schemes.

SEBI had capped the individual mutual fund investment limit in the overseas market at February-level, as the overall limit for the industry was inching closer to $7 billion set by the RBI.

However, with the sharp fall in the international markets, fund houses were allowed to make investments in overseas funds and securities up to the headroom available without breaching the overseas investment limits as of February 1 at the fund house level.

Resumption of overseas investment

Accordingly, Nippon India MF schemes (NIMF) investing in overseas securities were opened up for investment from June 22. However, post the resumption of the subscription in certain NIMF schemes investing in overseas securities, there has been substantial utilisation of available overseas investment limit.

Therefore, with a view to avoid breach of the overseas investment limit the fund house has suspended all investment avenues including lump-sum in Nippon India US Equity Opportunities, Japan Equity, Taiwan Equity, Multi Asset Fund and ETF Hang Seng BeES from Wednesday.

Incidentally, Edelweiss Mutual Fund and PGIM India also reopened their overseas mutual fund schemes last week.

Edelweiss MF had opened up fresh investment in seven of its schemes, while PGIM India also started accepting all kind of fresh investment in three of its international funds.

However, Motilal Oswal MF continued with the ban on fresh investment in its five international schemes. The fund house in a note to investors said it has not seen any major redemptions in the past few months since these restrictions were applied, resulting in no additional room for accepting fresh investment in any of the international funds.

Interestingly, overseas schemes of mutual funds have turned out to be the biggest wealth destructor leading to an erosion of 40-21 per cent of investors’ wealth from their peak and 38 to 24 per cent in last one year. With easy money fast disappearing, global markets are crashing on concern over economic growth leaving investors in the lurch.

Published on June 29, 2022
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