No more flows into Kotak’s Nasdaq ETF fund, but here are options

The fund may be re-opened at a later date, depending on further directions from the market regulator Securities and Exchange Board of India (SEBI).

“We have crossed the limit set by SEBI for foreign investment in ETFs. We have applied to SEBI for increase in the limit as there is still surplus limit available with the industry. If we get additional limit, we will open the fund. Our Fund will remain closed for subscription only till such time. This is for subscription only. There is no change for redemption. Nilesh Shah, Managing Director, Kotak Mahindra Mutual Fund said, the fund continues to provide daily redemptions and liquidity to all investors.

Funds Still Open

In February 2022, domestic mutual fund schemes, which had invested in shares of companies listed on foreign exchanges directly or indirectly through index funds or other actively managed funds, could no longer do so as MFs were banned by SEBI. The industry limit was not increased.

Later, these schemes got some relief as SEBI allowed them to invest in their schemes from February, 2022 onwards to the extent they had seen. Some international plans were reopened. Fund houses such as Nippon India MF, ICICI Prudential MF, Mirae MF and Edelweiss MF were able to reopen their schemes with some limits. However, mutual funds investing in ETFs listed overseas were yet to draw close to their limits, and it was business as usual for them.

At least for now, many of these funds are far from reaching their $300 million-cap.

For example, the Aditya Birla SL Nasdaq 100 FOF and the Invesco EQQQ Nasdaq 100 ETF FOF each have $280 million of headroom (from their current assets under management – ​​AUM – $300 million – limit) before reaching their respective limits. It is according to But keep in mind that both investor inflow and market movements can affect the AUM of these schemes. (see table)

MF distributors say investors should adopt an asset-allocation approach when it comes to international investments and if their international allocation has come down due to the correction in the US markets, they can invest lump sum in such funds.

“Nasdaq has seen a lot of improvement. If the international allocation of investors is reduced by 6-9%, they can use such funds for lumpsum investment to bridge the gap,” says Amol Joshi, Founder, Plan Rupee Investment Services .

The Nasdaq 100 is up 15% so far this year. However, this US market benchmark index is still down 24% from its all-time high in November 2021.