International Mutual Funds Remain Closed to Fresh Investments: Key Details

International Mutual Funds Remain Closed to Fresh Investments

More than four years after the mutual fund industry exhausted the regulatory limit for overseas investments, access to international schemes remains restricted. According to Value Research, 54 of the 66 international mutual funds it tracks are currently not accepting fresh investments. Only 12 schemes continue to accept fresh systematic investment plans (SIPs), while just one remains open for fresh lump-sum investments.

This means nearly 82% of international mutual fund schemes tracked by Value Research remain closed to fresh investments.

Industry-Wide Overseas Investment Limit

Unlike domestic equity or debt mutual funds, international schemes are subject to an industry-wide overseas investment limit. Once this ceiling was reached in 2022, fund houses began restricting fresh inflows to avoid breaching the limit.

Market Impact and Details

The number of available international mutual fund schemes has shrunk significantly, with only 12 schemes accepting fresh SIPs and 1 scheme open for fresh lump-sum investments.
The funds that continue to accept fresh SIPs provide exposure to a range of global markets, including US equities, developed markets, technology-focused portfolios, and international indices.
The table below lists the international mutual funds that currently accept fresh SIPs, along with their one-year returns and whether fresh lump-sum investments are also permitted.

Fund	1-year return (%)	Fresh SIP	Fresh lump-sum
Edelweiss Emerging Markets Opportunities Equity Offshore	68.8	Yes	No
Edelweiss Greater China Equity Offshore	57.7	Yes	No
Franklin Asian Equity	46.5	Yes	No
Edelweiss US Technology Equity FoF	44.2	Yes	No
PGIM India Emerging Markets Equity FoF	43.1	Yes	No
Edelweiss US Value Equity Offshore	33.8	Yes	No
Edelweiss Europe Dynamic Equity Offshore	30.5	Yes	No
Edelweiss ASEAN Equity Offshore	25.8	Yes	No
PGIM India Global Select Real Estate Securities FoF	25.7	Yes	No
Franklin U.S. Opportunities Equity Active FoF	22.6	Yes	No
PGIM India Global Equity Opportunities FoF	21.1	Yes	No
Baroda BNP Paribas Aqua FoF	20.5	Yes	Yes

Key Takeaways

Only 12 international mutual fund schemes continue to accept fresh SIPs, while 1 scheme remains open for fresh lump-sum investments.
The funds that continue to accept fresh SIPs provide exposure to a range of global markets, including US equities, developed markets, technology-focused portfolios, and international indices.
The table below lists the international mutual funds that currently accept fresh SIPs, along with their one-year returns and whether fresh lump-sum investments are also permitted.

FAQs

What is the reason for restricted access to international mutual funds?

The mutual fund industry exhausted the regulatory limit for overseas investments in 2022, leading to restrictions on fresh inflows to avoid breaching the limit.

What is the industry-wide overseas investment limit?

The industry-wide overseas investment limit is $7 billion for international mutual funds, while a separate $1 billion limit applies to investments in overseas exchange-traded funds (ETFs).

Can investors still invest in international mutual funds?

Yes, investors can still invest in international mutual funds, but only through the 12 schemes that continue to accept fresh SIPs and 1 scheme open for fresh lump-sum investments.

Conclusion

International mutual funds have emerged as a top-performing category over the past year, driven by a rally in global equities and a weaker rupee. However, investors seeking to add overseas exposure through mutual funds continue to face significant hurdles due to restricted access to these funds. Until regulators increase the overseas investment limit or additional headroom becomes available, the handful of schemes that continue to accept fresh SIPs are likely to remain among the few avenues for investors seeking global diversification through the mutual fund route.