The moves comes a few weeks after SEBI greenlit new inflows in battered overseas funds
23-Sep-2022 •Chirag Madia
The latest development
Mirae Asset Mutual Fund will start allowing existing subscribers to resume investing in the following international funds from today (September 23):
Investors can restart investing in overseas markets through systematic investment plans (SIPs), systematic transfer plans (STPs), switches and lumpsum with no limit restrictions.
Investors also have the option of exiting these funds.
Can new investors start investing in these funds?
No. Only existing investors will be allowed.
Why did Mirae Asset freeze subscriptions in global funds? Was there a problem?
It was a blanket freeze on all global funds, not limited to Mirae Asset alone.
Around the time international funds were launched, market regulator Securities and Exchange Board of India (SEBI) had set an overall investment limit of $7 billion for mutual funds, and a separate limit of $1 billion for ETFs.
So, when the $7 billion mark was breached, SEBI directed all mutual fund houses to stop accepting further investments this January.
What's changed now?
By June, SEBI relaxed their decision because a correction in global markets in the last few months gave more headroom for new investments.
In the last six months, Mirae Asset NYSE FANG+ ETF has given negative returns of 22.25 per cent.
Mirae Asset Hang Seng TECH ETF and Mirae Asset S&P 500 Top 50 ETF have posted returns of -16.16 per cent and -13.85 per cent, respectively, over the same time period.
The three funds had remained positive in the initial months of its launch, but a subsequent steep global selloff brought down their overall returns.
Then again, we should remember that overseas funds of other AMCs have seen a similar bloodbath, due to which the overall investment limit came below SEBI's $7 billion figure.
Have other fund houses started accepting fresh investments?
Edelweiss, ICICI Prudential and Nippon India were three fund houses that started accepting fresh inflows in their overseas funds, days after SEBI relaxed the rule in June.
However, a few days later, Nippon India paused accepting new investments again in five of its international funds.
Why have Indian investors taken a liking to international funds?
Investors were polarised when fund houses started rolling out international funds.
While many were enthused they could now get exposure to global giants, such as FAANG stocks (Facebook, Amazon, Apple, Netflix, Alphabet (Google)), others felt some of these funds were highly concentrated in nature.