Mutual Fund News : Temporary Suspension of Subscription in Kotak NASDAQ Fund of Fund by Kotak Mahindra Mutual Fund

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In a notice dated February 09, 2023 Kotak Mahindra Mutual Fund has decided to temporarily suspend subscriptions in their international mutual fund scheme – Kotak NASDAQ Fund of Fund. It is an open-ended fund of fund investing in units of overseas ETFs and/or index fund based on NASDAQ 100 Index.

Pursuant to SEBI circular no. SEBI/IMD/CIR NO. 7/104753/07 dated September 26, 2007, SEBI Circular-SEBI/HO/IMD/DF3/CIR/P/2020/225 dated November 05, 2020 and SEBI Circular SEBI/HO/IMD/IMDII/DOF3/P/CIR/2021/571 dated June 03, 2021, AMCs were allowed to make investments in overseas Exchange Traded Fund (ETF(s) subject to a maximum of US $ 300 million per Mutual Fund, within the overall industry limit of US $ 1 billion.

This announcement by Kotak Mahindra Mutual Fund comes days after Reserve Bank of India Governor Shaktikanta Das said that there was no proposal to increase the overseas investment limits for domestic mutual funds at the moment. And this temporary suspension has been done in order to avoid the breach of limit in open ended fund of funds investing in overseas Exchange-traded funds (ETFs).

The fund house has suspended lumpsum investments and switch-in in Kotak Nasdaq Fund of Fund. While fresh systematic registration, including systematic transfer plan (STP)/dividend Transfer Plan (DTP), into the scheme, will not be accepted effective from February 10, 2023 existing SIP/STP/DTP instalments will be also paused from March 1, 2023 till further notice.

The aforesaid suspension is temporary in nature and will be reviewed depending upon the buffer created due to the redemptions into these schemes or till further enhancement of limit by SEBI/RBI in this regard.

All other terms and conditions as mentioned in the Scheme Information Document (SID)/ Key Information Memorandum (KIM) of the aforesaid scheme of Kotak Mahindra Mutual Fund remain unchanged.