PPFAS MF to reopen fresh investments in Parag Parikh Flexi Cap Fund

PPFAS MF had stopped fresh inflows into Parag Parikh Flexi Cap Fund, which invests up to 35% of its corpus in foreign securities with effect from February 2, 2022. ie, fresh lump sum investment and fresh registration of SIPs and STPs. The plan was stopped. Other AMCs with schemes investing in foreign securities also followed suit. This came after the Securities and Exchange Board of India (SEBI) advised AMCs to stop further investments in foreign securities so as not to breach the industry-wide $7 billion limit.

As per the recent press release by PPFAS MF, since the AMC cannot remit further funds abroad till the limit is raised, all incremental investments will be in Indian stocks. While the AMC can continue to sell from its foreign stock holdings and buy some other foreign stock, it cannot remit this money with effect from February 2, 2022.

According to AMC, it has remitted less than $725 million and there is ample room for further foreign investment within the current per fund house limit of $1 billion. The AMC feels that the conditions are favorable for RBI to increase the investment limit in foreign securities. The $7 billion limit was set in April of 2008 when the assets under management of the Indian mutual fund industry were approx. 5 lakh crore and India’s foreign exchange reserves were about $309 billion. Today these numbers are around 37 lakh crore and $634 billion respectively. With the rapid influx of overseas investment schemes, regulators had to act in advance to avoid breaching the existing limits.