Nippon India MF turns off inflow tap for 5 global funds, cites limit

The fund house has suspended lump-sum subscription, switch-ins, and fresh registration of systematic investment plan/systematic transfer plan under five schemes that invest in international stocks

A month after resuming inflows into its international funds, Nippon India Mutual Fund (MF) has decided to stop fresh investments into its five international schemes since the fund house is close to exhausting its investment limit.

The fund house has suspended lump-sum subscription, switch-ins, and fresh registration of systematic investment plan/systematic transfer plan under the five schemes that invest in international stocks.

On June 22, the asset manager had notified it had resumed inflows into these schemes. The move followed directions issued by the Securities and Exchange Board of India (Sebi) that fund houses with fresh investment legroom can resume subscription to their schemes that invest in overseas markets.

On Wednesday, the fund house said it was once again suspending investments into Nippon India US Equity Opportunities Fund, Nippon India Japan Equity Fund, Nippon India Taiwan Equity Fund, Nippon India Multi Asset Fund, and Nippon India ETF Hang Seng BeES.

“After resumption of subscription to certain Nippon India MF schemes investing in overseas securities, there has been substantial utilisation of available overseas investment limits. Therefore, with a view to avoid breach of the overseas investment limit as of EOD of February 1, 2022, we propose to suspend lump-sum subscription,” said a notice by the fund house.

On January 31, Sebi directed fund houses to stop accepting fresh inflows into overseas schemes after the $7-billion industry-wide investment threshold got breached.

After a gap of nearly five months, the embargo on fresh inflows was lifted only for fund houses where overseas investment limits got created on account of redemptions and consequent sale of overseas securities after February 1.

Industry body Association of Mutual Funds in India had clarified that the total utilisation of the overseas investment limit by each fund house should remain capped at the amount as of February 1.

Data from Value Research shows the total assets under management (AUM) for international funds has declined from Rs 42,689 crore at the end of January to Rs 38,999 crore in May.  AUM has declined further as markets have seen a sharp fall this month.