Synopsis: Several international mutual funds have halted the process of new SIP registrations owing to the overseas investment limits. Baroda BNP Paribas Aqua Fund of Fund is the only scheme that is open for fresh SIPs as well as lump sum investments.
International mutual funds enable Indian investors to invest overseas, thus providing them with exposure to various foreign markets and companies. But, several fund houses have suspended new SIP registrations due to the limit on overseas investment. No new SIPs have been allowed in by 11 international funds and the only option available is to start a new SIP or invest lump sum in Baroda BNP Paribas Aqua Fund of Fund.
Which International Mutual Fund Is Still Open for Fresh SIPs?
Baroda BNP Paribas Aqua Fund of Fund is an international equity fund that invests in global companies operating in the water sector. It offers investors opportunities to exposure in the growth of buisness in water purification, infrastructure, and related technologies.The fund structure allows Indian investors to:
- Invest in global companies without opening overseas brokerage accounts.
- Diversify their portfolio beyond Indian equity markets.
- Gain exposure to a long-term global theme related to water scarcity and infrastructure development.
- Fund Snapshot & Performance
- NAV: ₹16.65
- AUM: ₹50.39 Cr
- Expense Ratio: 0.60%
- Exit Load: 1% (within 12 months)
- Minimum SIP: ₹500
- Lump Sum: ₹5,000
- 1-Year Return:19.0%
- 3-Year CAGR:15.1%
Why is the Fund Gaining Investor Attention?
Baroda BNP Paribas Aqua Fund of Funds has become notable in that it is the only foreign mutual fund which still accepts fresh subscriptions at present. The main reasons for investor attraction are as follows:
- Provides diversification beyond Indian equity markets through global exposure.
- Offers access to companies operating in the water management and infrastructure sector.
- Allows investors to participate in a long-term theme driven by rising global demand for water-related solutions.
- Provides exposure to overseas markets through a mutual fund structure without directly investing in foreign stocks.
Why Are International Mutual Funds Closing?
The halt of registration of new SIPs in international mutual funds is a result of restrictions on investments in foreign securities imposed for Indian mutual funds. As per the RBI regulations, the industry can invest up to $7 billion in foreign securities and another $1 billion in foreign ETFs.After the breach of the foreign securities limit by the industry in January 2022, the AMC was able to invest in foreign securities only as per their capacity as of February 1, 2022. Due to this, those AMC who exhausted their limit did not register new SIPs.
Risks Investors Should Consider
- The fund follows a thematic investment strategy focused on the water sector, which can result in higher volatility compared with diversified equity funds.
- Performance depends on global water-related companies and international market conditions.
- Currency movements between the Indian rupee and foreign currencies can impact returns.
- Global factors such as interest rates, economic conditions and geopolitical events can affect overseas equity markets.
- Past performance does not guarantee similar returns in the future.
Who Should Invest?
The fund may suit investors who already have a diversified equity portfolio, want a small allocation to international markets, and have a long-term investment horizon with a higher risk appetite. It may not be suitable for investors seeking broad-based equity exposure or low-risk investment options.
Can you Invest in this Fund?
Yes, investors can consider this fund if they want international exposure and understand the risks associated with thematic investing. However, investors should not invest only because it is currently the only international mutual fund open for fresh SIPs. The decision should depend on their portfolio allocation, financial goals and risk appetite.
Disclaimer: The information provided in this article is for educational purposes only and should not be construed as financial advice or investment recommendation. Returns mentioned are based on historical performance and may not be sustained in the future. Mutual fund investments are subject to market risks, including potential loss of capital. Investors are advised to assess their risk appetite and financial goals and to consult a certified financial advisor before investing.
