Informist, Monday, Nov. 4, 2024

MUMBAI – The Securities and Exchange Board of India has allowed Indian mutual fund houses to invest in overseas mutual funds or unit trusts that have up to 25% exposure to Indian securities, the regulator said in a circular Monday. The market regulator's draft consultation paper, issued in May, had proposed to allow investment in overseas funds whose investment in Indian securities does not exceed 20% of their assets.

The move aims "to facilitate ease of investment in overseas mutual funds or unit trusts, to bring transparency in the manner of investment, and to enable mutual funds to diversify their overseas investments", the regulator said in a circular.

If the fund house violates the exposure limit, the market regulator mandates an observance period of six months to monitor any portfolio rebalancing activity by the underlying overseas mutual fund scheme. During the observance period, Indian mutual fund houses cannot undertake any fresh investment in the overseas mutual fund or unit trust, and are only allowed to resume investing once the exposure limit falls below 25%, the circular said.

The regulator also said that investment by Indian mutual funds in an overseas mutual fund or unit trust should be liquidated in case of non-rebalancing of its exposure within the six-month observance period. If such liquidation is not carried out within six months of the end of the observance period, the Indian mutual fund house concerned will not be able to accept fresh subscriptions, launch new schemes, or levy an exit load on investors seeking to exit such schemes.

The fund houses are required to make disclosures of their overseas portfolios every quarter to ensure transparency among investors, according to the circular. End

Reported by Christina Titus

Edited by Rajeev Pai

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2024. All rights reserved.