Circular on Enhancement of Overseas Investment limits for Mutual Funds

Last updated: 07 November 2020

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The Securities and Exchange Board of India (SEBI) has announced an increase in the overseas investment limits for mutual funds. Each mutual fund can now invest up to US$600 million overseas, within an overall industry limit of US$7 billion. For overseas Exchange Traded Funds (ETFs), the limit is US$200 million per mutual fund, with an industry cap of US$1 billion. Specific allocation rules are in place for new fund offers and ongoing schemes, and mutual funds must report their utilisation monthly.

Securities and Exchange Board of India CIRCULAR SEBI/HO/IMD/DF3/CIR/P/2020/225 November 05, 2020 All Mutual Funds (MFs)/ Asset Management Companies (AMCs)/ Trustee Companies/ Board of Trustees of Mutual Funds/ Association of Mutual Funds in India (AMFI) Sir/Madam, Sub: Enhanceme

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FAQ :

Mutual funds can now invest up to US$600 million per fund overseas, within an industry limit of US$7 billion. For overseas ETFs, the limit is US$200 million per fund, with an industry limit of US$1 billion.

For overseas investments (excluding ETFs), US$50 million is reserved for each mutual fund individually within the overall US$7 billion industry limit.

Mutual funds launching NFOs to invest overseas must disclose the intended investment amount in scheme documents. This disclosed limit is valid for six months from the NFO closure; any unutilised amount then reverts to the industry-wide limit.

Ongoing schemes have an investment headroom of 20% of their average Assets Under Management (AUM) in overseas securities/ETFs from the previous three months, subject to the per-fund maximum limits.

Mutual funds are required to report their utilisation of overseas investment limits on a monthly basis, within 10 days from the end of each month.