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Market regulator SEBI has enhanced overseas investment limits for an individual mutual fund to $600 million from $300 million, with a cap of $7 billion for the overall mutual fund industry.
This apart, mutual funds can invest in an overseas Exchange Traded Fund subject to a maximum of $200 million per mutual fund, within the overall industry limit of $1 billion. The circular will come into force with immediate effect.
$50 m for each MFs
As far as the allocation methodology of investment limits is concerned, SEBI has said $50 million would be reserved for each MF individually, within the overall industry limit of $7 billion.
MFs launching new schemes intending to invest in overseas securities and ETFs shall ensure that the scheme documents disclose the intended amount that they plan to invest in overseas securities and ETFs subject to SEBI-specified investment limits.Such investment limits disclosed in scheme documents will be valid for a period of six months from the date of closure of NFO.
Thereafter, the unutilised limit, if any, will not be available to the mutual fund.
For all ongoing schemes that invest or are allowed to invest in overseas securities and ETFs, an investment headroom of 20 per cent of the average AUM of the previous three calendar months would be available subject to maximum limits. Further, MFs should report the utilisation of overseas investment limits on monthly basis, within 10 days from end of each month.
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