In 2015, SEBI put in place USD 500 Million allowance for overseas investment. Domestic AIFs were, however allowed to invest one-fourth of their corpus overseas. Further, overseas investments were required to have an Indian connection. In 2018, this allowance limit was raised to USD 750 Million. Now increasing the limit to USD 1500 Million will enable AIFs and VCFs whose current allowance is getting fulfilled to invest further. AIFs and VCFs have experienced rapid growth over the past five years. Such upward shifts in allowances will enable Indian AIFs to actively participate in global markets and avail equity investment opportunities in international startup companies.
Over the past five years, Portfolio Management Services (PMS) and AIFs have emerged as an alternative to mutual funds. Regulations have mandated that mutual funds should not hold more than 10% of the entire corpus of the fund in a single stock, but PMS and AIF have no such limitation owing to which they have created a better Alpha through concentrated portfolio building.