MFs open international funds for investments ahead of new tax rules

Franklin Templeton, Mirae Asset, Edelweiss mutual funds resume international schemes

Fund houses have opened up their international schemes for subscription to garner flows from investors looking to invest overseas before the new tax rules kick in from April 1. The fund houses that have resumed their international schemes are – Franklin Templeton Mutual Fund, Mirae Asset Mutual Fund and Edelweiss Mutual Fund.

The government amended the Finance Bill 2023 last week to discontinue long-term capital gains (LTCG) taxation for schemes that invest less than 35 per cent of their corpus in equities. This means that debt funds, international funds, gold ETFs and index funds along with some hybrid schemes will no longer enjoy tax benefits linked to LTCG from April 1.

Edelweiss Mutual has opened all its seven international funds for subscription through both the channels — lumpsum and systematic investment plans (SIP). Mirae Asset has opened six of its schemes for lumpsum investments including NYSE FANG+ ETF Fund of Fund, S&P 500 Top 50 ETF Fund of Fund and Hang Seng TECH ETF Fund of Fund.

"We have opened subscription in lumpsum manner for our three international ETFs and three Fund of Fund based on these ETFs from March 27 onwards. The existing SIP and STP’s will reopen from March 29. Fresh SIPs and STPs will not be allowed," said Siddharth Srivastava, head–ETF Product & Fund Manager, Mirae Asset Investment Managers.

Fund houses have been opening and closing their international schemes for subscription as and when they have enough headroom for investment in international equities. The total amount of foreign investment in the mutual fund industry is capped at $7 billion.