Enhancement of Overseas Investment limits for Mutual Funds
Summary
SEBI enhances the overseas investment limits for Mutual Funds to a maximum of US $600 million per fund within a US $7 billion industry cap. The circular establishes specific allocation methodologies distinguishing between New Fund Offers and ongoing schemes based on asset under management metrics. Mutual Funds are mandated to report the utilization of these limits monthly within ten days of the month's end.
Text
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 to enhance the investment limits per Mutual Fund as follows:
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.
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:
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.
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... 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.
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 enclosed at Annexure A.
All other conditions specified in the above mentioned circulars shall remain unchanged.
The circular shall come into force with immediate effect.
This circular is issued in exercise of the powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992, read with Regulation 77 of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
Source: SecMarx — Enhancement of Overseas Investment limits for Mutual Funds. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.