Edelweiss Mutual Fund has announced a new subscription limit of Rs 1 lakh per PAN per day for seven of its schemes investing in overseas securities. This measure is set to take effect from February 27, 2025, and includes six international funds and one index fund, reflecting adjustments aligned with regulatory guidance. The fund house's decision is part of a strategy to manage the headroom available within the prescribed overseas investment limits.
This restriction applies to various transaction types, including lumpsum investments, switch-ins, Systematic Transfer Plans (STP), Systematic Investment Plans (SIP), and other transaction categories. Notably, transactions reported before the cut-off time on February 25, 2025, will not be subjected to this new limit.
Edelweiss Mutual Fundcaps subscriptions in these overseas schemes:
As stated by Edelweiss Mutual Fund, "This restriction will be applicable based on the transaction reporting date. Further, transactions reported till February 25, 2025 before cut-off time including switches where switch-in scheme is any of the below will not be considered for such limit restriction." Meanwhile, pre-existing systematic transactions such as SIPs and STPs will remain unaffected."
Edelweiss Mutual Fund has indicated that "necessary changes will be carried out in the relevant sections of the SID/KIM of the designated schemes as mentioned above of the Mutual Fund. This notice-cum-addendum shall form an integral part of the SID / KIM / SAI of the Schemes as amended from time to time and shall override the conflicting provisions, if any, in this regard." This update ensures that scheme documents are aligned with the new investment constraints, maintaining transparency and regulatory compliance.
This development follows the Securities and Exchange Board of India's (SEBI) earlier directive in February 2022, which required mutual funds to halt new overseas investments to adhere to the Reserve Bank of India's $7 billion cap on such investments. The Reserve Bank also established a $1 billion limit for individual fund houses concerning foreign exchange-traded funds. Although SEBI later permitted mutual funds to resume foreign investments, they must remain within the established RBI limits.
The move by Edelweiss Mutual Fund to impose subscription limits is a strategic response to manage compliance with these overarching financial regulations. Within the competitive landscape, Edelweiss faces competition from major players like HDFC Mutual Fund, which boasts significant market penetration, and SBI Mutual Fund, known for its robust research and development budget. These competitors also navigate the same regulatory environment, influencing their overseas investment strategies.
The introduction of these restrictions by Edelweiss reflects the broader trends within the mutual fund industry, where fund houses are recalibrating strategies to align with regulatory frameworks while attempting to optimise their global investment portfolios. Analysts suggest that such measures could help mutual funds stabilise their operations in a volatile and rapidly changing international investment landscape.