Get full access to one story every week, and to summaries of all other stories. Just create a free account

On 3 February, Facebook shares (or, Meta Platforms) crashed a record 26% after a weak earnings report. The crash wiped $230 billion off its market capitalisation in a single day. For perspective, that’s more than the market cap of Reliance Industries, India’s most valuable company on the bourses.

While many market experts saw this as a neat buying opportunity, most Indian mutual fund investors could only watch Meta’s slide—not buy it. Blame this on an end-January directive from the Association of Mutual Funds of India (AMFI). The industry body essentially told its members to stop investing in overseas securities from 2 February. The direction followed an email from market regulator Sebi to AMFI on 28 January.

“In order to avoid breach of industry-wide overseas limits as allowed by RBI, you are advised to inform all AMCs to stop subscriptions intending to invest in overseas securities with immediate effect,” Sebi’s email had said. The Reserve Bank of India (RBI) is India’s central bank. Asset management companies (AMCs)—mutual fund houses—had no option but to comply.

The limit Sebi was referring to isn’t small money—$7 billion (~ Rs 52,500 crore). Last increased in 2008, the limit seemed more than bountiful just a couple of years ago. “It was hardly anything two or three years ago,” says Neil Parikh, chief executive of PPFAS Mutual Fund, among the key players in international investing from India. “Now, the mutual fund route has exhausted nearly $7 billion.”

He should know. Nearly 30 mutual fund schemes have joined the global investing bandwagon over the past two years. “It has really taken up investor mind space. The inflows have been pretty crazy in this space,” Parikh adds.

The numbers bear this out as well. From just Rs 7,600 crore ($1 billion) as of April 2020, the value of mutual funds’ investments in foreign companies zoomed to more than Rs 58,000 crore ($7.7 billion) as of December 2021, according to data from markets data provider Prime MF Database.

Explore more infographics like this in The Ken -
Visual Stories

Sure, the pandemic-driven, liquidity-fuelled rally in stocks across global markets since April 2020 would have contributed to this growth. But a big chunk is from fresh inflows into mutual funds investing in global stocks. The $7 billion limit is on the basis of the cost of investments, not on their market value, say industry experts The Ken spoke to.

There’s so much demand that mutual funds nearly breached the limit in January end, utilising nearly 95%, according to industry grapevine. Fund houses are now eagerly waiting for RBI to bump up the limit. “It [the bump-up] just seems to have been caught up in bureaucracy. There is no reason why the limit should not be increased,” says a senior executive in a fund house who does not want to be named. The executive and others The Ken spoke to requested anonymity as they didn’t want to be seen publicly talking about the matter.

AUTHOR

Anand Kalyanaraman

A certified Chartered Accountant, Anand chose to pack the power of numbers with words when he left a career of seven years in accounting, putting together MIS reports, and investment research to enter journalism. Before joining The Ken, Anand was Deputy Editor at The Hindu BusinessLine, a newspaper he worked at for 11 years.

View Full Profile

Subscribe to read this story

The Ken is the only business subscription you need. Questions?

 

Premium

  • 5 original and reported longform business stories every week
  • Access to ONLY India edition
  • Close to 250 exclusive stories every year
  • Full access to over 6 years of paywalled stories
  • Pick up to 5 premium subscriber newsletters
  • 4 original and reported longform business stories each week
  • Access to ONLY Southeast Asia edition
  • Close to 200 exclusive stories every year
  • Full access to all paywalled stories since March 2020
  • Pick up to 5 premium subscriber newsletters

Rs. 2,750 /year

$ 120 /year

India Edition
Subscribe Subscribe
Most Asked For

Borderless

  • 8 original and reported longform business stories each week
  • Access to both India and Southeast Asia editions
  • Close to 400 exclusive stories every year
  • Full access to over 6 years of paywalled stories across India and Southeast Asia
  • Unlimited access to all premium subscriber newsletters
  • Visual Stories

Rs. 4,200 /year

Subscribe
 

Echelon

  • 8 original and reported longform business stories each week
  • Access to both India and Southeast Asia editions
  • Close to 400 exclusive stories every year
  • Full access to over 6 years of paywalled stories across India and Southeast Asia
  • Unlimited access to all premium subscriber newsletters
  • Visual Stories
  • Bonus annual gift subscription
  • Priority access to all new products and features

Rs. 8,474 /year

Subscribe
Or

Questions?

What kind of subscription plans do you offer?

We have three types of subscriptions
- Premium which gives you access to either the India or the Southeast Asia edition.
- Borderless which gives you complete access to The Ken across both editions
- Echelon which gives you complete access to The Ken across both editions along with a bonus gift subscription

What do I get if I subscribe?

The Premium edition gives you access to stories in that edition along with any five subscriber-only newsletters of your choice.

The Borderless and Echelon subscription gives you complete access to The Ken across editions and unlimited access to as many newsletters as you like.

What topics do you usually write about?

We publish sharp, original and reported stories on technology, business and healthcare. Our stories are forward-looking, analytical and directional — supported by data, visualisations and infographics. We use language and narrative that is accessible to even lay readers. And we optimise for quality over quantity, every single time.

Our specialised subscriber-only newsletters are written by our expert, award-winning journalists and cover a range of topics across finance, retail, clean energy, cryptocurrency, ed-tech and many more.

How many newsletters do you have?

We are constantly adding specialised subscriber-only newsletters all the time. All of these are written by our team of award-winning journalists on a specialised topic.

You can see the list of newsletters that we publish over here.

Does a Premium subscription to your Indian edition get me access to the Southeast Asia edition? Or vice-versa?

Afraid not. Each edition is separate with its own subscription plan. The India edition publishes stories focused on India. The Southeast Asia edition is focused on Southeast Asia. We may occasionally cross-publish stories from one edition to the other.

We recommend the Borderless or the Echelon Plan which will give you access to stories across both editions.

Do you have a mobile app?

Yes! We have a top-rated mobile app on both iOS and Android which allows you to read on-the-go and has some amazing features like the ability to bookmark stories, save on your device, dark mode, and much more. It’s really the best way to read The Ken.

Is there a free trial?

You can sign up for a free account to experience The Ken and understand our products better. We’ll send you some free stories and newsletters occasionally, and you can access our archive of previously published free stories. You can stay on the free account as long as you’d like.

The vast majority of our stories, articles and newsletters can be accessed only by a paid subscription.

Do you offer any discounts?

Sorry, no. Our journalism is funded completely by our subscribers. We believe that quality journalism comes at a price, and readers trust and pay us so that we can remain independent.

Do you offer refunds?

No. We allow you to sample our journalism for free before signing up, and after you do, we stand by its quality. But we do not offer refunds.

I am facing some trouble purchasing a subscription. What can I do?

Just write to us at [email protected] with details. We’ll help you out.

I have a few more questions. How can I reach out to you?

Sure. Just email us at [email protected] or follow us on Twitter.