Mutual fund houses can now resume investing in global equity markets. According to the Securities and Exchange Board of India (SEBI), mutual fund (MF) houses can now resume investment in global equity markets within the aggregate mandated limit of $7 billion for the industry. According to investment experts, this will help long-term mutual fund investors take advantage of the discounted availability of global stocks. He further said that mutual fund investors who believe in diversified portfolio can now switch to Flexi Mutual Funds, which have the right to invest up to 30 per cent of their net exposure in global markets. However, he said that the capital market regulator has not increased the investment limit. In fact, SEBI has allowed MF houses to resume investment in global equities as their exposure limits were reduced after the recent sell-off in equity markets.
Speaking on how this SEBI regulation will benefit mutual fund investors, Jitendra Solanki, SEBI registered tax and investment expert said, “Following this new SEBI guideline, fund managers will be able to invest in global equities which have been in the trend of recent times. Days After These Days Discounted Prices Now Selling Started From Russo-Ukraine War, mutual fund Investors will get exposure to the global market.”
SEBI registered investment expert further said that such approval from SEBI will help investors to get a properly diversified portfolio by investing in flexi-cap mutual funds, which have a mandate to invest up to 30 per cent of their net exposure.
On what kind of mutual fund investors will benefit from this SEBI move, Pankaj Mathpal, CEO & MD, Optima Money Managers said, “Those who have a long-term horizon will be the major beneficiaries of this SEBI approval because Speculations are high on the upcoming slowdown in the US economy on account of high inflation and rising commodity prices. In such a scenario, global equity markets including Dalal Street are expected to remain highly volatile in the short to medium term. In such a scenario, global equities will remain more volatile. FIIs have already pulled out a significant amount from their portfolio. Hence, long-term outlook can expect maximum benefits from this move.”
In its communication to AMFI last week, SEBI said, “Mutual fund schemes may resume subscription till the end of the day of February 1, 2022 without violating the foreign investment limit up to the available headroom and investment in foreign funds/securities.” mutual fund level.
A mutual fund intending to launch a new scheme and invest abroad is required to specify that it will invest outside India. Following the SEBI directive, several fund houses such as PPFAS Mutual Fund, DSP Mutual Fund and Edelweiss Mutual Fund had stopped accepting inflows into some of their schemes with international mandate.
As per mutual fund investment rules, domestic mutual fund houses can invest up to $7 billion in global stocks and an additional $1 billion in exchange-traded funds (ETFs).
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