Our latest opinion on recommended international funds

International mutual funds have come to a standstill. While it's been more than two years since the category started hitting roadblocks, the latest SEBI restrictions on funds investing in overseas ETFs acted like the final nail in the coffin, prompting us to put all international funds with 'Best Buy' and 'Buy' opinion on 'Hold'. What has happened? As most of you might be aware, there is a regulatory limit on foreign remittance that Indian mutual funds are permitted to do. Let's rewind to January 2022, the first time the mutual fund industry had exhausted this US $7 billion limit for investing in overseas securities (except ETFs) . As a result, many funds had to suspend fresh inflows to comply with the rules. However, in June 2022, global markets witnessed a notable correction that led to redemptions from international funds, creating a temporary headroom for funds to invest overseas. Since then, many funds have been playing a cat-and-mouse game with their subscription status. However, the leeway available with the funds investing in overseas ETFs (which are subject to a separate limit of US $1 billion) ensured that investors still had enough options and a viable route to diversify internationally. Accordingly, we had modified our recommendation list in this category all this while to give you feasible investing options. However, now, even this limit of US $1 billion has been exhausted. SEBI has asked funds investing in overseas ETFs to stop taking fresh money from April 01, 2024. When asked if the overseas investment limit would be enhanced, this is what RBI governor Shaktikanta Das had to say in a recent media interaction : "This request has been coming to us from the mutual fund industry from time to time. We do not question the basis of their request. It is a question of the right time for us to do it. We have just come out of the stress on the exchange rate of the Rupee. We experienced huge outflows. Now things have stabilised, and the Rupee has remained very stable. Of course, some people read it wrongly and call it a stabilised arrangement. But it is not stabilised. It is market-determined. We will take the call at the right time", he said. It appears that while the RBI is not hostil