MUMBAI: Following a Securities and Exchange Board of India (Sebi) directive to mutual fund homes in India to cease accepting subscriptions into schemes investing abroad, PPFAS Mutual Fund has stopped accepting inflows into PPFAS Flexicap Fund with impact from 2 February 2022. The stoppage is on account of the mutual fund {industry} as an entire hitting the restrict of $7 billion for abroad investments stipulated by the Sebi.
The stoppage is more likely to have an effect on funds which might be totally dedicated to worldwide investments in addition to these investing part of their corpus outdoors India. PPFAS Flexicap Fund invests as much as 35% of its corpus in overseas shares, primarily shares of US expertise corporations. However, funds investing in abroad Exchange Traded Funds (ETFs) have a separate restrict of $1 billion and will not be affected.
The industry-wide restrict has been stored unchanged since 2008. An enormous leap in flows into mutual funds investing overseas up to now 12 months has pushed the {industry} in direction of the restrict. Neither recent lump sums nor recent SIPs will probably be permitted within the PPFAS Flexicap Fund. Existing Systematic Investment Plans (SIPs) and Systematic Transfer Plans (STPs) will probably be allowed to proceed. The fund home added that the suspension is more likely to be short-term until Sebi raises the {industry} restrict.
Other fund homes resembling Motilal Oswal Mutual Fund have additionally stopped lump sums into their schemes investing outdoors India such because the Motilal Oswal S&P 500 Index Fund and Motilal Oswal NASDAQ 100 Fund of Funds (FoF). Franklin Templeton Mutual Fund additionally issued a discover halting flows into its abroad feeder funds on Saturday however a spokesperson for the fund home knowledgeable Mint that the discover was being withdrawn.
Fund homes are awaiting readability from the Association of Mutual Funds in India (AMFI) and Sebi on this matter. There is a normal expectation that Sebi will increase the restrict given the excessive stage of India’s foreign exchange reserves which exceed $600 billion. US expertise shares have corrected in 2022 to some extent however curiosity in them amongst Indian traders stays excessive.
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