If you are planning to start a new SIP in International Mutual Fund, then you are almost out of options. Due to regulatory limits, most asset management companies (AMCs) have banned new SIPs and lumpsum investments in international funds. At present, Baroda BNP Paribas Aqua Fund of Funds (FoF) is the only international mutual fund left in India, which is accepting both SIP and lumpsum investments from new investors.
Why are international funds closing?
This ban is not due to poor performance of the funds, but due to regulatory limits. The total limit for investment in foreign securities is already fixed for the Indian mutual fund industry. Many fund houses have completely utilized their available limits, so they cannot accept new investments. This is why 11 more international mutual fund schemes have stopped new SIP registrations in recent times.
New investment option left in only one scheme
According to Value Research data, among 65 international mutual fund schemes, only Baroda BNP Paribas Aqua FoF is now open for new SIP and lumpsum investments. However, experts say that this situation is also not permanent. If the foreign investment limit of this fund house is also reached, then this scheme may also be closed to new investors.
Existing investors need not panic
Stopping of new investments will not affect those investors who have already started SIP. In most cases, the existing SIPs will continue as normal and the investments made earlier will also continue to rise or fall as per the market performance. This restriction is mainly applicable to new investors and new SIP registrations. However, rules may differ from fund house to fund house, so investors must check the latest information from their AMC.
What are the options for investors?
Experts say that if the objective of an investor is only global diversification, then he can consider open international funds for now or wait for the regulatory limit to increase in future. Additionally, some investors may also consider other legitimate foreign investment options. Before investing it is important to assess the risk, investment period and your financial goals.
Experts believe that if the limit of foreign investment is increased in future, then many international mutual funds can open again for new investments. Till then, options for investors wishing to invest in global markets are likely to remain limited.
Leave a Reply