Indian investors appear determined not to miss any opportunity to access overseas markets through the domestic mutual funds, no matter how limited. Even as the mutual fund route faces regulatory constraints and uncertain periods of temporary subscription reopenings, investor accounts in the overseas fund-of-funds category have surged by approximately 2.3 lakh—climbing to 16 lakh over the past year.
Indian investors face significant barriers to accessing these international-focused funds, despite their strong long-term performance track record. Regulatory caps on overseas assets and investments have created a stop-start system that restricts consistent participation in global markets.
The constraints stem from February 2022, when SEBI suspended new foreign equity investments by domestic mutual funds. The move aimed to prevent the industry from breaching the RBI’s $7-billion aggregate investment ceiling—a safeguard designed to manage foreign exchange outflows and preserve India’s balance of payments equilibrium. Additionally, the RBI set individual fund house limits at $1 billion for direct overseas investments and another $1 billion for international ETF exposure. While SEBI eventually lifted the suspension, fund houses must now operate strictly within these boundaries.
The result is an unpredictable investment landscape. International funds in India function on an intermittent basis rather than offering continuous access. Subscription windows open sporadically—typically when investor redemptions or falling market valuations free up headroom under the regulatory caps. Once funds approach these thresholds again, they stop accepting new investments, creating uncertainty for those seeking global diversification.
Investment avenues currently available
Indian investors exploring global exposure currently have 21 international mutual fund schemes out of 72 accepting new money. Six of these are exchange-traded funds (ETFs) listed on secondary markets. However, a word of caution: Surging demand coupled with limited market-making activity has pushed these overseas ETFs to trade at steep premiums above their actual Net Asset Value. As per the traded data on December 31, 2025, on the NSE, these ETFs were traded at 5-21 per cent premium to their NAV values.
The table below lists schemes currently open for subscriptions as of January 3, 2026. Keep in mind that asset management companies can halt fresh inflows once they hit their regulatory caps.
When building your long-term portfolio, consider allocating 10-20 per cent toward international markets. This allocation should align with your overall financial objectives and comfort with risk, rather than following a one-size-fits-all approach. However, when fund houses are forced to suspend inflows at the regulator’s direction, such restrictions can disrupt portfolio construction and impair disciplined asset allocation.
Published on January 3, 2026