AMFI nod to MFs to resume subscription to overseas funds

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The Association of Mutual Funds in India (AMFI) clarified on Tuesday that AMCs (asset management companies) may resume subscriptions and make investments in overseas funds and securities up to the headroom available without breaching the overseas investment limit utilised by individual mutual funds and AMCs as on February 1, 2022.

The assets under management of international funds, according to Value Research, stood at Rs 38,999 crore at the end of May 2022. This compares with Rs 45,655 crore at the end of December, 2021. The cap for overseas investments in international securities is $7 billion.

AMFI said the total utilisation of the overseas investment limits by each AMC or mutual fund shall remain capped at the amount as on February 1, 2022 to ensure compliance with the Sebi directive. “Thus, the AMCs may utilise the headroom available in the overseas investment limit created due to redemptions and consequent sale of overseas securities post February 1, 2022,” AMFI said in a statement.

In a letter to AMFI on June 17, Sebi had said MFs may resume subscriptions and make investments in overseas funds and securities. “AMFI is also required to ensure that the total utilisation of the overseas investment limit by each AMC and MF shall remain capped at the amount as of February1, 2022,”the capital markets regulator observed in the letter.

Several funds have little or no headroom.

Edelweiss Asset Management has decided to revoke the temporary suspension in seven of its international offerings with effect from June 21, 2022. ICICI Prudential Trust (the Trustee) has approved resuming subscriptions in the five of its schemes with effect from June 22, 2022. However, Motilal Oswal MF in its note to investors on Tuesday said it has not had major redemptions in the past few months since these restrictions were applied, resulting in no additional room for accepting fresh investment in any of its international funds.

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