Last Updated:
A limit of Rs 1 lakh per PAN per day has been set on investments in seven schemes as they near foreign investment limits
In February 2022, SEBI directed domestic mutual fund companies to halt further investments in foreign stocks. (Representative/Shutterstock)
Edelweiss Mutual Fund, one of India’s largest fund houses, has imposed limits on investment in seven of its schemes. Effective from February 27, the limitations will apply to schemes that invest in global securities.
This decision comes as some schemes have nearly reached their foreign investment limit. The fund house, with assets worth approximately Rs 1.43 lakh crore at the end of the December quarter, aims to manage the allocation effectively.
Edelweiss Mutual Fund, India’s 13th largest asset management company (AMC), has announced a restriction on subscriptions. Effective from February 27, lump sum investments, switch-ins, systematic investment plans (SIPs), systematic transfer plans (STPs), and other investment methods will be capped at Rs 1 lakh per PAN per day.
According to the fund house, this restriction will be applicable based on the transaction reporting date. Additionally, transactions reported before the cut-off time until February 25, 2023, including switch-in schemes, will not be subject to this limit restriction. Existing systematic transactions, such as SIPs and STPs, will remain unaffected.
The schemes on which Edelweiss has imposed a ban include the Edelweiss ASEAN Equity Offshore Fund, Edelweiss Greater China Equity Offshore Fund, Edelweiss US Technology Equity Fund of Fund, Edelweiss Emerging Markets Opportunities Equity Offshore Fund, Edelweiss Europe Dynamic Equity Offshore Fund, Edelweiss US Value Equity Offshore Fund, and Edelweiss MSCI India Domestic & World Healthcare 45 Index Fund.
Of these, six funds focus entirely on foreign securities, while the Edelweiss MSCI India Domestic & World Healthcare 45 Index Fund invests in leading companies in India and the United States.
In February 2022, the Securities and Exchange Board of India (SEBI) directed domestic mutual fund companies to halt further investments in foreign stocks. This directive aimed to ensure compliance with the Reserve Bank of India’s (RBI) stipulated limit of $7 billion for investments in foreign securities and funds.
The central bank also imposed a ceiling of $1 billion for individual fund houses and $1 billion for investments in foreign exchange-traded funds (ETFs). Subsequently, SEBI granted permission to mutual funds to resume investing in foreign stocks, contingent upon their fund allocation adhering to RBI limits.
According to data from Value Research, China equity funds have given an average return of 55.38 per cent in the year up to February 21. US-based funds, which include the Nasdaq 100, S&P 500 and NYSE FENG, have also given an average return of 26 per cent over a one-year period. Funds investing in global equities have gained 17.48 per cent.
There are currently about 70 Indian investment schemes, with assets under management (AUM) totalling approximately Rs 65,000 crore, that focus on thematic investments in foreign markets. These themes include areas such as artificial intelligence, emerging technologies, semiconductors, and electric vehicles.
