Increased overseas investment limit for local mutual funds

Why in news?

Securities and Exchange Board of India (SEBI) has increased overseas investment limit for local mutual funds.

What are the new guidelines ?

Mutual funds can make overseas investments up to a maximum of -

-US $ 1 billion per Mutual Fund out of

-Overall industry limit of US $ 7 billion.

While in overseas Exchange Traded Fund, mutual funds can invest a maximum of US $ 300 million per Mutual Fund with industry limit of US $ 1 billion.

What are Mutual Fund?

It is an open-end professionally managed investment fund that attracts money from many investors to purchase securities.

Both retail or institutional investors can invest in mutual funds.

 Benefits of mutual funds include economies of scale, liquidity, diversification, and professional management.

Primary structures of mutual funds are open-end funds, closed-end funds, unit investment trusts and exchange-traded funds (ETFs).

What are Exchange-traded funds (ETFs)?

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