Increasing the overseas limit for Mutual Funds will bring global diversification to the portfolio and retail investors will also get the benefit of it.
The overseas limit has been increased to $1 billion.
The Securities Exchange Board of India (SEBI) has taken a big decision for the mutual funds industry. SEBI has increased the overseas investment limit for individual mutual funds from $600 million to $1 billion. In addition, the investment limit for overseas exchange-traded funds has been increased from $200 million per fund to $300 million. It is believed that retail investors will get a lot of benefit from this decision.
At present, many mutual funds have come very close to the overseas investment limit of $600 million. In such a situation, increasing this limit will increase global exposure. Portfolio diversification will be easier for the fund house. Many facilities are available only in foreign countries, now their benefits will be more. Experts say that if global diversification is included in the portfolio, then the volatility decreases. Talking about investors, they are more attracted towards funds with global diversification. There are benefits as well as security. In such a situation, if due to the increase in the limit for the fund house, many schemes which had reached the limit, their doors will still be open for investors.
Overseas Exchange Traded Fund limit of $300 million
Earlier in November 2020, SEBI had increased the overseas investment limit for each fund house from $300 million to $600 million. However, the overseas limit for the entire mutual fund industry has been retained at $7 billion. Apart from this, individual mutual funds can now invest up to $ 300 million in overseas exchange traded funds. However, this investment limit for the entire industry remains at $1 billion.
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