SEBI has vide its circular dated 3rd June, 2021 enhanced the overseas investment limits for mutual funds as follows:
they can make overseas investments subject to a maximum of US$1 billion per mutual fund subject to an industry limit of USD$7 billion;
in overseas exchange traded fund, they can make investment of US$ 300 million per mutual fund subject to an industry limit of US$1 billion.
The earlier limits were US$600 million (per mutual fund) and US$200 million (for exchange traded fund) respectively. The overall industry limits are the same.
In respect of investment limits to be disclosed in the scheme documents at the time of NFO as specified in Para 2.2 of the aforesaid circular, and the investment limits on ongoing schemes as specified in Para 2.3 of the aforesaid circular, such limits would henceforth be soft limits for the purpose of reporting only by Mutual Funds on monthly basis in the format prescribed vide SEBI circular dated November 5, 2020.
The aforesaid circular referred to above is the Para 1 of SEBI Circular No. SEBI/HO/IMD/DF3/CIR/P/2020/225 dated November 05, 2020 which is here i.e.
SEBI has vide its circular dated 21st May, 2021 enhanced the overseas investment limits for SEBI registered alternative investment funds (AIFs)/ venture capital funds (VCFs) from USD 750 million to USD 1500 million. Details follow.
SEBI circular dated 5th November, 2020 regarding enhancement in overseas limits for mutual funds.
In partial modification to clause 1(b) of SEBI Circular No. SEBI/IMD/CIR No.7/104753/08 dated September 26, 2007 and clause 2 of SEBI Circular SEBI/IMD/CIR No.2/122577/08 dated April 08, 2008, it has been decided by SEBI to enhance the investment limits per Mutual Fund as follows: 1.1. Mutual Funds can make overseas investments subject to a maximum of US $ 600 million per Mutual Fund, within the overall industry limit of US $ 7 billion. 1.2. Mutual Funds can make investments in overseas Exchange Traded Fund (ETF(s)) subject to a maximum of US $ 200 million per Mutual Fund, within the overall industry limit of US $ 1 billion.
The allocation methodology of the aforementioned limits shall be as follows: 2.1. In case of overseas investments specified at Para 1.1, US $ 50 million would be reserved for each Mutual Fund individually, within the overall industry limit of US $ 7 billion. 2.2. New Fund Offers (NFOs): Mutual Funds launching new schemes intending to invest in Overseas securities / Overseas ETFs shall ensure that the scheme documents shall disclose the intended amount that they plan to invest in Overseas securities / Overseas ETFs subject to maximum limits specified at Para 1, as the case maybe. Such limits disclosed in scheme documents will be valid for a period of six months from the date of closure of NFO. Thereafter the unutilized limit, if any, shall not be available to the Mutual Fund for investment in Overseas securities / Overseas ETFs and shall be available towards the unutilized industry wide limits. Further investments should follow the norms for ongoing schemes. 2.3. Ongoing Schemes: For all ongoing schemes that invest or are allowed to invest in Overseas securities / Overseas ETFs, an investment headroom of 20% of the average AUM in Overseas securities / Overseas ETFs of the previous three calendar months would be available to the Mutual Fund for that month to invest in Overseas securities / Overseas ETFs subject to maximum limits specified at Para 1, as the case maybe.
Further, Mutual Funds shall report the utilisation of overseas investment limits on monthly basis, within 10 days from end of each month. The format for reporting is given at Annexure A of the circular.
The circular shall come into force with immediate effect.