Dedicated MFs to invest in foreign equity
Such funds will offer the advantages of a diversified foreign portfolio to investors.
By Radhika Bhalla, TNN |
NEW DELHI: IN A bid to enable retail investors to diversify geographically, the government is looking to allow dedicated MFs that only invest in foreign equities. Such funds will offer the advantages of a diversified foreign portfolio to investors.
The current ceiling of $3 billion per annum on aggregate investment by MFs in overseas instruments may be enhanced in the process while the cap for individual investors at $50,000 annually is likely to stay.
“Dedicated MFs investing in foreign equities will provide a platform to individual investors who want to invest in overseas instruments but lack knowledge about global markets. The $50,000 limit for individuals is unutilised for this reason,” a finance ministry official said.
“Although the $50,000 limit for individuals investing overseas existed, there hadn’t been too many takers given the complexity of investing overseas,” said Fidelity Fund Management MD and country head Ashu Suyash.
Currently, some MFs exercise options to invest in foreign equities subject to a cap. The proposed dedicated MFs for foreign equities will, however, need to be extra savvy because they’ll be subject to foreign equity as well as currency risks.
“Some AMCs launching dedicated funds in India may have offshore partners whose services can be leveraged for Indian clients. Retail investors will have the advantage of well-researched markets to invest in,” a source said.
radhika.bhalla@timesgroup.com
The current ceiling of $3 billion per annum on aggregate investment by MFs in overseas instruments may be enhanced in the process while the cap for individual investors at $50,000 annually is likely to stay.
“Dedicated MFs investing in foreign equities will provide a platform to individual investors who want to invest in overseas instruments but lack knowledge about global markets. The $50,000 limit for individuals is unutilised for this reason,” a finance ministry official said.
“Although the $50,000 limit for individuals investing overseas existed, there hadn’t been too many takers given the complexity of investing overseas,” said Fidelity Fund Management MD and country head Ashu Suyash.
Currently, some MFs exercise options to invest in foreign equities subject to a cap. The proposed dedicated MFs for foreign equities will, however, need to be extra savvy because they’ll be subject to foreign equity as well as currency risks.
“Some AMCs launching dedicated funds in India may have offshore partners whose services can be leveraged for Indian clients. Retail investors will have the advantage of well-researched markets to invest in,” a source said.
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radhika.bhalla@timesgroup.com
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