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From April 1, 2024, mutual fund companies will no longer be able to accept inflows into schemes that invest in overseas exchange-traded funds (ETFs). As inflows into these foreign ETFs approached the mandated investment limit of $1 billion, market regulator Securities and Exchange Board of India (SEBI) issued directions in this regard.
Association of Mutual Funds of India (AMFI) has sent a notification in this regard to mutual fund companies. The letter states, “AMC should stop accepting applications for funds that invest in foreign ETFs from April 1, 2024. However, applications for funds that invest in foreign securities other than international ETFs should not be accepted. may continue until further communication from regulatory authorities.”
The rapid rise in the US market, supported by US tech stocks, is thought to be behind the breach of restrictions.
For the uninitiated, there are two types of mutual fund schemes that invest in overseas markets. One is a direct purchase of foreign stocks, with a limit of his $7 billion, and the other is a type of fund, typically a fund that buys his foreign ETF units with a limit of $1 billion.・Of Fund.
The mutual fund industry has been requesting the central bank to revise the limit on overseas investment since 2022, but despite several requests, the central bank has yet to raise the limit. Currently, there are 70 schemes specializing in overseas investment.
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