Parag Parikh Flexicap Scheme, which had closed subscription after the overseas investment limit of the mutual fund industry got exhausted, will start accepting fresh inflows from March 15.
However, as the overseas investment curbs are yet to be lifted, all the incremental flows will be deployed only in domestic stocks.
In a note to unitholders, Rajeev Thakkar, CIO and director of PPFAS Mutual Fund said over time the weightage of foreign stocks for the scheme will come down. But as and when overseas investment limits are increased, the scheme will rebalance the portfolio as per the then prevailing situation and valuations.
The fund invests in a mix of international and domestic stocks. It decided to go for fresh subscriptions after the Securities and Exchange Board of India (Sebi) advised MFs to stop subscriptions in schemes intending to invest in overseas securities to avoid breach of industry-wide limits of $7 billion .
Investments in overseas exchange-traded funds (ETFs) may continue as the $1-billion limit is yet to be fully utilised. Currently, MFs can make investments in overseas ETFs subject to a maximum of $300 million per MF, within the overall industry limit of $1 billion.
“As of now we have no visibility on if /when and by how much the limit for overseas investments will be revised. As I write today, there is a conflict going on between Russia and Ukraine, crude oil prices have risen and the Indian Rupee has fallen somewhat. If and when the limits are increased, and if it is of a relatively small amount, the same will get exhausted soon. In such a scenario, having funds readily available will be advantageous rather than opening the scheme after the limit increase only to see the industry wide cap get breached again,” said Thakkar in the note.