MFs can invest in international stocks but can’t breach the limit: AMFI

The Association of Mutual Funds in India (AMFI) today clarified that although the capital markets regulator Sebi has lifted the restriction on mutual funds to invest in foreign stocks, AMCs cannot breach the overseas investment limit.

“Mutual fund schemes may resume subscriptions and make investments in overseas funds/securities up to the headroom available without breaching the overseas investment limits utilized by MFs/AMCs as of EOD of February 1, 2022, at mutual fund level,” AMFI said in a release.

It further said that the total utilization of the overseas investment limit by each AMC or mutual fund shall remain capped at the amount as of February 1, 2022, to ensure compliance with the Sebi directive.

“Thus, the AMCs may utilize the headroom available in the overseas investment limit created due to redemptions and consequent sale of overseas securities post February 01, 2022,” the mutual fund body said.

After the mutual fund industry crossed the mandated limit of $7 billion for overseas investments, Sebi had asked AMCs to stop taking fresh subscriptions in schemes investing in overseas stocks.

Following the Sebi's direction, several fund houses had stopped accepting inflows into their certain schemes with international mandates.

"Mutual fund schemes may resume subscriptions and make investments in overseas funds/securities up to the headroom available without breaching the overseas investment limits as of end-of-day of February 1, 2022, at the mutual fund level," Sebi said in a communication sent to AMFI on Friday.