International Mutual Fund: Investment in global equities is also subject to risk but it can be reduced by diversification. A better way is to invest in international mutual funds. If you too are thinking of doing this, then there is good news for you. Market regulator SEBI has increased the limit of overseas investment in mutual funds. This limit has now increased from $ 300 million to $ 600 million for individual fund houses. Apart from this, the limit for investment in Overseas ETFs by Domestic Mutual Funds has been increased from $ 50 million to $ 200 million.
What will happen now
SEBI said that the mutual fund houses which are considering to introduce new schemes or ETFs related to foreign investment should make sure that the amount invested by them should also be mentioned in the scheme documents. These documents are valid for six months from the last date of NFO.
In the circular issued, SEBI said that after this, mutual funds will not have the opportunity to invest unutilized limit balances in securities or ETFs in foreign markets and after that, they will join the industry limits. The regulator said that schemes that invest in foreign markets or ETFs or have obtained permission, can invest up to 20 per cent of their average asset management (AUM) for the last three months in the foreign market. The fund houses will have to submit a monthly report of investment limit usage to SEBI.
International Fund matters to investors
You can take advantage of the growth in shares of foreign companies by investing in international funds. This helps in diversifying the portfolios. Investing in global funds/stocks also helps you to take advantage of the depreciation in the rupee. In the last 35 years, the rupee has weakened at an average of 6 per cent every year. Investing in these funds is seen in the same way as investing in a domestic fund. There is no additional rule for them, as is the case with investing in shares.
These funds are also managed by experts who have the expertise, technology and global reach to identify, analyze and monitor stocks and portfolios. However, there are also many disadvantages of investing by mutual funds, as the applicable NAV comes after one day, there is the risk of currency, if kept below 3 years, long term capital gains tax is levied.