For Indian investors wishing to diversify their portfolio with international funds, there is good news. Now, investors can invest in five international funds of Motilal Oswal Asset Management Company (MOAMC) with no maximum subscription amount. Beginning on December 1, 2022, investors were allowed to subscribe to a few of Motilal Oswal’s overseas funds. However, there were restrictions in place regarding the amount of investments and SIPs.
Now, effective January 1, 2023, the Motilal Oswal mutual fund is withdrawing the temporary suspension of subscriptions in 5 of their international funds. MOAMC will now be accepting fresh subscriptions in these schemes via Lump sum and Systematic Investment options such as SIPs, STPs, etc, without any restrictions.
5 MOAMC funds that will allow global investing without any cap on the investment amount are:
Motilal Oswal S&P 500 Index Fund
Motilal Oswal NASDAQ 100 ETF
Motilal Oswal NASDAQ 100 Fund of Fund
Motilal Oswal MSCI EAFE Top 100 Select Index Fund
Motilal Oswal NASDAQ Q 50 ETF
Restrictions in Buying International Funds
From December 1, 2022, the restrictions rules were – MOAMC had allowed investors to invest in 3 international funds Motilal Oswal S&P 500 Index Fund, Motilal Oswal NASDAQ 100 Fund of Fund and Motilal Oswal MSCI EAFE Top 100 Select Index Fund but with some restrictions in place as far as the investment amount is concerned, The fund house will be accepting no more than Rs. 2 lakh, per PAN, every calendar month for each of these schemes through lump sum or switch-in applications. Further, the option to invest through systematic investments like SIP and STP is not allowed.
Removal of restrictions
Now MOAMC has decided to accept the investments without any amount-wise restrictions through lumpsum and switch-ins with effect from January 01, 2023. This means, all the restrictions placed earlier on the maximum amount of investments will not eb there from January 1, 2023. Further, all the existing systematic options such as SIPs, STPs etc. under these mutual fund schemes, being paused earlier, shall be also resumed from January 1, 2023. Also, the investors will be able to register fresh SIPs, STPs effective from January 01, 2023.
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SEBI Rule on International Funds
Previously, SEBI had directed fund houses to cease accepting deposits in overseas funds because the upper limit was about to be reached. The regulator has set a $7 billion industry limit for mutual funds to invest in foreign securities and funds. Any mutual fund house may have a maximum of $1 billion USD in overseas investments. There is a separate $1 billion limit for investing in exchange-traded funds (ETFs).
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Following the SEBI’s directive, fund houses were forced to halt subscriptions to schemes that invest in foreign securities. Furthermore, investors were unable to invest abroad via mutual funds. Later, from February 1, 2022, fund houses at the level of each were entitled to invest in foreign funds and securities up to the headroom permitted without going above the permitted limits for overseas investments.