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SBI Mutual Fund, the country’s largest fund house, expects RBI to increase the cap on mutual fund investments in the overseas equity market from $7 billion and another $1 billion for overseas Exchange Traded Funds.
With MF industry reaching closer to the overseas investment limit, SEBI banned MF investment abroad in February, 2022.
Early this month, RBI allowed resident individuals to open Foreign Currency Account and dollar-denominated fixed deposits in the International Financial Services Centres (IFSCs) at GIFT City in Gujarat under the Liberalised Remittance Scheme for investment in overseas markets.
Earlier, remittances under LRS to IFSCs were permitted only for making investments in overseas securities listed in GIFT City.
DP Singh, Deputy Managing Director of SBI Mutual Fund, said that based on the mutual fund industry’s recommendations, RBI will enhance the industry cap on overseas investment sooner rather than later.
Unlike the LRS route, all overseas investments made through mutual funds must be definitely redeemed in domestic currency, he said in a press conference to announce a thematic new fund offer on Innovative Opportunities Fund, which opened for subscription on Monday.
The fund would predominantly invest in equity and equity-related instruments of companies that seek to benefit from the adoption of innovative strategies and themes.
Shamsher Singh, Managing Director & CEO of SBI Funds Management, said the fund is a good opportunity for investors who like to invest in companies that innovate to gain a competitive edge and change the traditional process to enhance value.
The Innovation Opportunities Fund can invest 35 per cent in foreign securities as and when regulations are eased.
“We have seen disruptions across sectors such as automobiles, financial services, energy, media and entertainment, technology, healthcare, e-commerce and industrials due to innovation,” said Singh.
He added that the collaboration between a proactive government and the private sector has fostered new startups built on innovation.
Besides product and service innovators, the fund will invest in process investors and innovation adaptors to widen the investment scope.
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