Tax tweaks send foreign mutual funds into a 5-month outflow eclipse

Shadow of decline lingers in virtually all subscription-happy fund houses

Following alterations in the tax structure, mutual fund (MF) schemes that invest in overseas securities have experienced a sharp decline in inflows. In the first five months of 2023-24 (FY24), international MF schemes have received an average monthly gross inflow of only Rs 270 crore, compared to Rs 490 crore during the same period in the previous year.

This decline persists despite nearly all fund houses opening subscriptions for such schemes, with higher redemptions creating headroom for fresh investments.

At the end of January 2022, fund houses were compelled to limit inflows into their schemes as they neared the exhaustion