Subscription to these mutual funds has to be stopped, SEBI has instructed.

Market regulator SEBI has banned some mutual funds from taking fresh subscriptions. This SEBI directive is for funds of funds that invest in Exchange Traded Funds i.e. ETFs listed on foreign exchange. These funds will not be able to take new subscriptions from April 1.

RBI has fixed this limit.

The Securities and Exchange Board of India (SEBI) has issued these new guidelines at a time when the RBI is about to meet the limit set by the respective funds. The Reserve Bank of India has set an investment limit of $1 billion in a fund of funds investing in foreign exchange-listed ETFs.

For this reason, SEBI has given instructions.

According to data from the Association of Mutual Funds in India, investments equivalent to 95 percent of the limit set by the RBI for overseas ETFs have already come in. For this reason, the market regulator has prohibited such funds from taking fresh subscriptions from the beginning of the new financial year, so as not to breach the limit set by the RBI.

There is no change in the remaining funds.

SEBI directed ETF feeders of the Association of Mutual Funds in India to inform all fund houses about the new provision. SEBI has not changed the provisions of other overseas feeder funds at present. Overseas feeder funds are funds that also include foreign assets.

Funds follow this index.

The recent rally in US stock markets has been attributed to the capping of investments in foreign exchange-listed ETFs. Over the past few months, US stocks, especially tech stocks, have recorded a significant rally. Most funds that invest in ETFs listed on US stock exchanges track the Nasdaq 100 index. The Nasdaq is primarily an index of tech stocks.

This share increased by 250% in one year.

Over the past one year, the Nasdaq 100 index has recorded a 44 percent increase. Many stocks in the Nasdaq 100 have performed strongly during this period. Amazon’s stock is up 78% over the past year, while Microsoft’s is up 56%. Shares of Google’s parent company Alphabet rose 40 percent. Over the past year, shares of chipmaker Nvidia have been the biggest gainer in the Nasdaq 100 index, up 250 percent.

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