28 International Mutual Funds Suspend SIPs Due to Overseas Investment Limits

International Funds Suspend SIPs Amid Overseas Investment Limits

According to Value Research data, PGIM India has stopped existing SIPs in three international schemes from 8 August, while Edelweiss will stop SIPs in six schemes from 12 August. The restriction applies only to future SIP instalments, meaning existing investments will remain invested.

Investors can continue to hold their units, redeem them, or switch to another scheme. This move is not unique to PGIM India and Edelweiss, as 19 other international schemes had already stopped accepting existing SIPs.

Regulatory Ceiling on Overseas Investments

Indian mutual funds collectively have a regulatory ceiling of about $7 billion for overseas investments, which has remained unchanged since early 2022. As international markets and existing overseas investments grow, fund houses have less room to deploy additional money abroad.

Each fund house also has a separate overseas investment ceiling of about $1 billion, meaning an AMC can run out of its permitted overseas investment capacity even if some headroom remains at the industry level.

Market Impact and Details

PGIM India has stopped existing SIPs in three international schemes from 8 August.
Edelweiss will stop SIPs in six schemes from 12 August.
Baroda BNP Paribas Aqua FoF is the only international fund still accepting fresh SIP registrations.
Radhika Gupta, MD & CEO of Edelweiss Mutual Fund, mentioned that the decision to close existing SIPs was not one the fund house was happy to take, but it had “no choice” because of the prevailing RBI limits on overseas investments.

Key Takeaways

28 international mutual fund schemes have stopped accepting existing SIP instalments due to regulatory limits on foreign investments.
Existing investments will remain invested, and investors can continue to hold their units, redeem them, or switch to another scheme.
Regulatory ceiling on overseas investments is a major factor affecting Indian investors seeking global diversification.

FAQs

What happens to existing SIP investments?

Existing investments will remain invested, and investors can continue to hold their units, redeem them, or switch to another scheme.

Why are international funds suspending SIPs?

Regulatory limits on foreign investments are the primary reason for suspending SIPs. Indian mutual funds collectively have a regulatory ceiling of about $7 billion for overseas investments.

Will international funds restart SIPs?

Radhika Gupta, MD & CEO of Edelweiss Mutual Fund, assured investors that they would restart SIPs if the limits are opened up.

Conclusion

Indian investors seeking global diversification are facing a new challenge as 28 international mutual fund schemes have stopped accepting existing SIP instalments due to regulatory limits on foreign investments. As the regulatory ceiling on overseas investments remains unchanged, fund houses have less room to deploy additional money abroad. Investors can continue to hold their units, redeem them, or switch to another scheme. It is essential to consult a SEBI-registered advisor before making any investment decisions.