Explaining why Parag Parikh Flexi Cap fund stopped accepting fresh investments


Parag Parikh mutual fund has recently announced that it would not be accepting fresh lumpsum or fresh sip registrations in Parag Parikh Flexi Cap fund from February 2, 2022.

This will in no way affect ongoing SIPs and STPs registered prior to February 2, 2022.

Parag Parikh Flexi Cap Fund invests up to 35% of its total corpus into foreign stocks, mostly and usually US based companies with Technology being the preferred sector.

ppfas fund

What is Parag Parikh Flexi Cap Fund?

Parag Parikh Flexi Cap Fund as the name suggests is a flexi cap fund.

A flexi cap fund by mandate requires a minimum of 65% investment in to equity at all times.

It is considered an equity fund for taxation purposes and accordingly taxed.

A flexi cap fund has no restriction with respect to market caps or sectors, it is the most flexible of all equity funds because of this reason.

Parag Parikh Flexi Cap fund along with the domestic market,  also invests up to 35% of its total corpus into foreign stocks.

It has a focused approach despite not being a focused fund with the number of holdings .


Additional reading: Click Here to read why you should review your mutual fund portfolio yearly

Why the restriction?

SEBI has directed fund houses to stop accepting fresh investments into schemes investing in foreign companies.

This direction has been warranted since the mutual fund industry had surpassed the limit of $ 7 billion for overseas investments.

This is applicable for all fund houses with schemes investing in foreign companies.

Therefore fund houses have been communicating their investors about the same which is applicable on sip, lumpsum and stp transactions.

This will have no bearing on past investments nor sip registered previously.


Are you investing in the right mutual funds?

Can the limit be raised?

Yes and most likely it will be soon.

The exact date and the confirmation of the same has to yet be confirmed though.

The limit was last set in 2008 and has never been raised since then.

This makes sense since Indian investors in the past have not given international investing much importance.

This is true for fund houses too who rarely launched any new international mutual fund schemes from 2008 to 2020.

Therefore since there was no fresh fund launches and investors did not show keen interest in international mutual fund schemes, there was no need to raise the limit.

We also need to be aware that 10-12 years ago the mutual fund industry both in terms of investors and fund houses was still at a nascent stage.


Additional reading: Click Here to read about Financial Habits to adopt for Financial Stability

What changed after 2020?

During the market crash of 2020 due to the corona outbreak, the Indian stock market was one of the worst affected.

After a couple of months when recovery in terms of market returns picked up, developed markets initially paced much ahead of the developing economies.

This is when diversification as a concept gained more prominence.

This meant investors were now ready to look beyond domestic markets for their investments and mutual fund houses which had hardly launched any international fund schemes were now changing their stance.

This can be better understood by the table below




 International Funds launched from 1st April 2020 to 31st January 2022

Motilal Oswal S&P 500 Index

Axis Global Equity Alpha FoF

Invesco India Invesco Global Consumer Trends FoF

Kotak International REIT FoF

Kotak Nasdaq 100 FoF

Axis Greater China Equity FoF

HSBC Global Equity Climate Change FoF

SBI International Access – Us Equity FoF

Mirae Asset NYSE FANG +ETF

BNP Paribas Funds Aqua FoF

Axis Global Innovation FoF

Kotak Global Innovation FoF

IDFC US Equity FoF

Mirae Asset S&P 500 Top 50 FoF

HDFC Developed World Indexes

ICICI Pru Nasdaq 100 Index

Mahindra Manulife Asis Pacific Reits FoF

Aditya Birla SL Nasdaq 100 FoF

Motilal Oswal MSCI Top 100 Select Index

PGIM India Global Select Real Estate Securities FoF

Mirae Asset Hang Seng Tech ETF

Nippon India Taiwan Equity

Motilal Oswal Nasdaq Q 50 ETF

ICICI Pru Strategic Metal & Energy Equity FoF


Are you investing in the right mutual funds?



Close to 25 international funds were launched in a period of around 20 months which makes for an average of more than 1 fund being launched every month.

This has always been the trend with the overall industry though, most thematic schemes are usually launched when the theme is in demand.

The point of diversification is to mitigate risks and yet ironically most of the investments in International funds have gone to US based funds.

This gives impetus to the old belief that investors are motivated by short term volatile returns rather than long term stable gains.


Why are domestic funds restricting investments?

Even domestic mutual funds which are primarily investing in domestic companies with nominal exposure to international companies have stopped fresh investments and with good reasons.

In order to gain international exposure, investors would move their attention towards such domestic mutual funds since the international mutual funds cannot accept fresh investments.

This would mean a higher inflow for such domestic mutual funds within a short period.

Since they themselves cannot invest in international companies, they would be forced to invest these inflows into domestic companies which affect the overall portfolio stability.

For portfolio enquiriesemail us with your doubts at info@themutualfundguide.com

Disclaimer : While due precaution has been undertaken in the preparation of this article, The Mutual Fund Guide or any of its authors will not be held liable for any investments based on the above article. The above article should not be considered financial advice and has been published only for your perusal. Due credit has been given in case wherever required, in case you feel any part violates any rights then do get in touch with us and we shall get it duly removed.  
Mutual Fund investments are subject to market risks. Please read the offer document carefully before investing

Copyright © 2022  The Mutual Fund Guide, All rights reserved

My Instagram