Mfs Tepid Over Offshore Investments

Mumbai: The domestic mutual fund industry has mopped up only about $ 400-500 million from local investors for offshore investment schemes, indicating that the increased in the overall limit for such schemes by $1 billion to $5 billion by the Reserve Bank of India (RBI) was just an enabler for the industry to offer global diversification for investors and there was no pressing requirement. The regulations, which also increased the individual cap on mutual funds to $300 million for offshore schemes, have never been a hurdle for the industry.

Fund managers have been making a case for diversification, but going by the trend of some recently unveiled offshore funds, they are not appropriately diversified. Moreover, most of the offshore schemes unveiled by fund houses have set apart 65 per cent of their allocation to the booming Indian markets and offer only a part of the funds collected to global stocks. Retail investors look for diversification only when market takes a dip. Diversification is the need of the hour. Indian investors have to become a part of the global growth story. It can result in less knowledgeable fund managers burning their fingers investing overseas. Ill-advised investors can fall prey to less thoughtful fund managers and that can be dangerous.