• SEBI issued circular on enhancement of overseas investment limits for mutual funds.
• In partial modification to clause 1(b) of circular SEBI/IMD/CIR No.7/104753/08 from September 2007 and clause 2 of circular SEBI/IMD/CIR No.2/122577/08 from April 2008.

Enhancements

• Mutual funds can make overseas investments subject to a maximum of USD600mn per fund, within the overall industry limit of USD7bn; investments in overseas ETFs subject to a maximum of USD200mn per fund, within the overall industry limit of USD1bn.
• In case of overseas investments as previously specified, USD50mn would be reserved for each mutual fund individually, within the overall industry limit of USD7bn.
• Funds launching new schemes intending to invest in overseas securities or ETFs shall ensure that scheme documents disclose the amount planned for overseas investment.
• These limits will be valid for six months from the date of closure of NFO; any unutilized limit will not be available to the fund but will be available towards industry wide limits.
• For ongoing schemes, an investment headroom of 20% of average AUM in overseas securities/ETFs of the previous 3 calendar months would be available for that month.
• Mutual funds shall report the utilization of overseas investment limits on a monthly basis, within 10 days from end of each month, according to the format in annexure A.

Effectiveness

• The circular shall come into force with immediate effect.