Explained: Fresh Mutual Fund Investment In International Funds Has Been Halted From Today

In a fresh blow to the mutual fund industry in India, the Association of Mutual Funds in India (AMFI) has asked MF houses to stop taking new lump-sum investments in international stock-investment schemes. Furthermore, Mutual funds have also been urged by the industry organization to stop accepting new systematic investing mandates from investors. The suspension will come into effect from today, February 2, 2022.

The move comes as a result of breach in overseas investment limit of $7 billion, which was set by the SEBI for the Indian mutual fund industry. Mutual fund firms have been advised to stop taking a new lump sum and SIP investment inflow for global market schemes. Existing SIPs, on the other hand, may or may not be impacted, depending on the AMC providing scheme however, it is also advised to stop fresh SIP in MF. The restriction on the fresh inflow in MF is prohibited until further notice. This restriction will impact investors' one-time purchases, altering SIPs, new SIPs, and STPs for the funds. However, as is usual, investors will be able to redeem their existing investments in the MF.

Furthermore, fund houses will be unable to acquire listed shares, securities, or units of schemes (other than exchange-traded funds) in foreign markets. In other words, the restriction is only imposed on the inflows into the India-based mutual fund schemes that invest in overseas securities of other mutual fund schemes in other countries. The restriction is, however, temporary. Investors will able to continue their contributio to funds that invest in global ETFs.