No extra flows in Kotak’s Nasdaq ETF fund, however listed here are the alternate options

Kotak Mutual Fund (Kotak MF) has suspended accepting contemporary investments in its Kotak Nasdaq Fund of Fund, after the fund hit the worldwide funding restrict of $300 million for funds investing in worldwide alternate traded funds (ETFs). The fund had belongings underneath administration of ₹2,053 crore ($247 million) as of 31 January, 2023, closing in on the $300 million-limit.

Depending on additional instructions from market regulator Securities and Exchange Board of India (Sebi), the fund could also be reopened later.

“We have hit the Sebi-prescribed restrict of abroad funding in ETFs. We have utilized to Sebi for improve in restrict because the trade nonetheless has surplus restrict accessible. We will open the fund if we get further restrict. Our funds will stay shut for subscriptions solely until such time. This is just for subscriptions. There isn’t any change for redemptions. The fund continues to supply day by day redemptions and liquidity to all buyers,” said Nilesh Shah, managing director of Kotak Mahindra Mutual Fund.

Funds still open

In February 2022, domestic mutual fund schemes that invested in shares of companies listed on foreign exchanges either directly or indirectly through index funds or other actively-managed funds, couldn’t do that anymore as the MF industry limits were not enhanced by Sebi.

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Later, these schemes got some relief as Sebi allowed them to invest to the extent they had seen redemptions in their schemes since February, 2022. A few international schemes were reopened. Fund houses such as Nippon India MF, ICICI Prudential MF, Mirae MF and Edelweiss MF were able to reopen their schemes, albeit with some limits. However, MFs investing in overseas-listed ETFs were yet to come close to their limits, and it was business as usual for them.

At least as of now, several of these funds remain far from hitting their $300 million-limit.

For example, Aditya Birla SL Nasdaq 100 FOF and Invesco EQQQ Nasdaq 100 ETF FOF each have $280 million headroom (after accounting for their existing assets under management – AUM – from the $300 million-limit) before hitting their respective limits. But keep in mind that both investor flows and market movements can influence the AUM of these schemes. (see: table)

MF distributors say investors should take an asset-allocation approach when it comes to international investing, and if their international allocation has reduced due to correction in US markets, they can do lumpsum investments in such funds.

“Nasdaq has seen quite a bit of correction. If investors’ international allocation has reduced by 6-9%, they can use such funds for lumpsum investments to reduce such gaps,” says Amol Joshi, founding father of Plan Rupee Investment Services.

Nasdaq 100 has surged 15% thus far this yr. However, this US market benchmark index continues to be 24% under its all-time excessive in November 2021.

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