SEBI: MFs can now invest in IPOs, FPOs to be listed on foreign bourses; Can also invest in short term deposits in foreign banks

Indian investors looking to invest in overseas markets may soon be spoilt for choice with RBI raising the cap on mutual funds' overseas investment from 4 billion to 5 billion dollars, fund houses like SBI, ABN Amro, Fidelity, Deutsche and HSBC plan to launch global funds soon. They say these funds will invest across various assets abroad.

While RBI has raised the overall cap, SEBI has enhanced the limit on overseas investment for individual fund houses from 200 million to 300 million dollars. There are 9 such funds available to Indian investors, of which 1 NFO is under way. Most of them invest up to 65% in Indian markets. But five NFOs that recently closed, collected 500 million dollars.

SEBI yesterday also said that MFs can invest in derivatives listed on recognised bourses. MFs can also now invest in short term deposits in foreign banks and REITs listed on foreign bourses. The overall cap for foreign ETF investment will be $ 1 billion.

SEBI added that MFs can now invest in IPOs, FPOs to be listed on foreign bourses. MFs can also invest in money market instruments not below investment grade amd also in GSecs not below investment grade.