Motilal Oswal Asset Management Company has requested SEBI to increase the limit of USD 1 billion (approx.) 7,400) crore was given to the fund house for international investment, two persons with knowledge of the matter independently confirmed to the mint. Motilal Oswal Mutual Fund consists of an Exchange Traded Fund (ETF) and a Fund of Funds (FoF) that tracks the NASDAQ Index and an index fund that tracks the S&P 500 Index. Motilal Oswal NASDAQ ETF has assets under management (AUM) 5,704 crore and Motilal Oswal S&P 500 Index Fund has assets 2,398 crore (by October 2021). Launched in March 2011, the NASDAQ ETF has delivered 26.2% CAGR over the past 10 years, sharply outperforming the domestic Indian equity market. The S&P BSE 500, a proxy for the Indian stock market, has given a CAGR of 16.5 per cent over the past 10 years. Motilal Oswal S&P 500 Index Fund, launched in April 2020, has delivered 33.7% since inception.
sum total of 8,102 crores exceeds the maximum limit. However, SEBI limits are applicable on the remittance amount and not on the AUM. The latter also includes an increase in value due to the fund’s returns, not just inflows. It is not clear how much discount the AMC has in terms of remittance amount. Motilal Oswal AMC has also launched a new fund tracking the MSCI EAFE Index that focuses on developed markets outside the United States such as Europe and Japan. It also plans to launch a scheme investing in emerging markets.
Mutual fund investors have invested large amounts of money in international funds in recent years. The AUM of the fund-of-funds investing abroad, which captures the share of this investment, has increased by 1,764 crore in October 2018 to 23,013 crores in October 2021, a 13-fold jump in 3 years. In November 2020, SEBI increased the foreign investment limit per fund house from USD 300 million to USD 600 million and in June 2021, the regulator further increased the limit to USD 1 billion per fund house. However, the broad cap of US$7 billion set by a 2008 circular in the mutual fund industry remains the same. A senior mutual fund industry official, on the condition of anonymity, said, “Given India’s comfortable foreign exchange reserves of around USD 640 billion, I am confident that SEBI and RBI will limit the mutual fund industry to foreign investment. Will increase.”
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