From next month i.e. 1st April, you will not be able to invest in those mutual fund schemes which invest money in foreign ETFs i.e. exchange traded funds. Stock market regulator Securities and Exchange Board of India (SEBI) has banned mutual funds from taking new investments from this date. SEBI’s order has come because the maximum limit of investment in foreign ETFs is fixed at 1 billion dollars (about ₹ 8,332 crore). Investment in this has now reached close to this limit. Regarding this, SEBI has also written a letter to the Association of Mutual Funds in India (AMFI), the organization that heads mutual fund houses in the country. Two schemes of mutual funds that invest abroad: 1. Direct investment in foreign shares: In this, mutual fund companies invest directly in foreign shares. For this, the maximum limit of 7 billion dollars (about ₹ 58,347 crore) has been fixed. After going beyond this limit, SEBI bans investment in it. Earlier in January 2022, the investment limit had reached $7 billion. After which SEBI had asked to stop the investment. Again in 2023, SEBI had withdrawn this order and said that if the Assets Under Management (AUM) of any mutual fund has fallen due to the fall in the prices of foreign stocks, then they can invest in foreign stocks. 2. Investment in Fund of Funds: In this, mutual funds buy units of foreign ETFs. For this, a maximum limit of 1 billion dollars is fixed. SEBI has just ordered a ban on investment in this. AMFI itself also keeps in mind the upper limit. Mutual fund schemes investing abroad always keep in mind the upper limit of investment. Due to this, many times they do not take investment even after the limit is increased. At the same time, when their AUM decreases, they start investing again. Earlier, four schemes of mutual funds Nippon India US Equity Opportunities, Nippon India Japan Equity, Nippon India Taiwan Equity, and Nippon India ETF Hong-Seng BeES had stopped taking investments on 26 February.
