Mutual funds are a popular investment option for many individuals. Recently, there have been significant changes in the operations of Mahindra Kotak mutual fund and Edelweiss mutual fund. This article aims to shed light on these changes and their implications for investors.
Both Mahindra Kotak and Edelweiss mutual funds have made notable changes in their investment strategies. Specifically, they have restricted investments in their overseas funds. While investors can still redeem their units without any issues, new subscriptions have been suspended for the time being.
In January, the Securities and Exchange Board of India (SEBI) issued a directive to mutual funds. It asked those investing in overseas securities to halt further investments. This was to ensure that they did not breach the industry-wide limits set by the Reserve Bank of India (RBI). The overall limit for fund houses to invest in overseas securities is $7 billion. Additionally, there's a separate $1 billion limit for investments in overseas exchange-traded funds.
International funds offer investors a chance to diversify their portfolio by investing in markets outside their home country. In the past year, these funds faced challenges and didn't perform as well as anticipated.
However, recent trends show a positive shift. In the last three months, international funds have seen an average return of 17%. This is a significant improvement, especially when compared to their one-year average return of -3%.
It's essential to note that these figures are averages, and individual fund performance can vary. When considering international funds, it's crucial to research and perhaps consult with a financial advisor to understand the potential risks and rewards.
The recent changes in the Mahindra Kotak mutual fund and Edelweiss mutual fund highlight the dynamic nature of the investment world. While these suspensions might seem concerning, they are a result of regulatory guidelines and the fund houses' strategies. As always, investors should stay informed and consult with financial advisors to make the best decisions for their portfolios.