Overseas investment limit for individual fund houses enhanced to $1bn by SEBI

The investment limit for an individual mutual fund house at overseas was increased to $1billion from $600 million by the Security Exchange Board of India (SEBI), the markets regulator. Yet the capital for investing abroad remains unchanged at $7 billion.

The maximum investment of $300 million per mutual funds at overseas exchange traded funds (ETFs) has been allowed to fund houses. This resulted to be higher than the current limit of $200 million.

Since several fund houses approached to raise the limit, SEBI made the move as Indian investors enhanced their interests for global portfolio diversification.

Few of the AMCs were taken close to the last foreign investment limit of $600 million due to the heavy rise of intrigueness in international investing.

According to a data from the association of mutual funds in India (AMFI), the average net assets under management for April 2021 stood at ₹13,441 crore in the fund of funds (FoF) category. Funds that are primarily purchase local stocks, but also invest some part of their corpus board are not included in these figures.

The foreign investment limit per fund house was raised to $300 million to $600 million in November 2020 by the Security Exchange Board of India (SEBI),while for ETFs it was increased from $50 million to $200 million.

As said by Rajeev Thakkar, chief investment officer, PPFAS Mutual Fund,  The need for international diversification was felt from a very long time. The move is said to be long awaited and much needed as the BSE Sensex grows at a rapid clip.  Previous month the overseas investment limit for alternative investment funds (AIFs) and venture capital funds (VCFs) was increased to $1,500 million from $750 million by SEBI.

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