The market regulator said this will be applicable on the condition that the total investment in Indian securities by such foreign funds should not exceed 25% of their net assets. “Indian mutual fund schemes may also invest in foreign MFs/UTs which have investments in Indian securities, provided that the total investment in Indian securities by these foreign MFs/UTs does not exceed 25% of their assets.” SEBI said in a circular that the move is aimed at simplifying investment in foreign MFs/UTs, bringing transparency in investment methodology and enabling MFs to diversify their foreign investments.
SEBI said that the new framework will come into effect with immediate effect. “All investors in foreign MFs/UTs have equal and proportionate rights in the fund, i.e. they get a share of the returns/profits from the fund in proportion to their contributions and have equal rights,” it said. MF schemes are required to ensure that contributions of all investors in foreign MFs/UTs are combined into a single investment vehicle without any side vehicles. The fund of foreign MF/UT should be a blind pool with no segregated portfolios, thereby ensuring that all investors have equal and proportionate rights in the fund.
Post investment, if exposure limits are breached, Indian MF schemes are permitted to monitor any portfolio rebalancing activity by the underlying foreign MF/UT for a period of six months from the date of publicly available information of such breach. Will be given. During the compliance period, the Indian MF Scheme shall not make any fresh investments in such foreign MF/UT and may resume its investment in such foreign MF/UT only if the investment in Indian securities by such foreign MF/UT exceeds 25%. falls below the limit.
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