Description

HSBC Mutual Fund temporarily suspends new subscriptions, switch-ins, and fresh SIP/STP/IDCW registrations in four schemes to prevent breach of overseas investment limits.

Summary

HSBC Mutual Fund has temporarily suspended new subscriptions in four schemes that invest in overseas securities, effective from close of business hours on December 03, 2025. The suspension applies to lumpsum purchases, switch-ins, and fresh registrations of SIP, STP, and IDCW Transfer Plans. This action is taken to comply with SEBI’s overseas investment limits as per its letter dated June 17, 2022, which restricts AMCs from breaching limits that existed as of February 1, 2022 at the Fund level.

Key Points

  • Temporary suspension affects four HSBC schemes: Global Equity Climate Change Fund of Fund, Asia Pacific (Ex Japan) Dividend Yield Fund, Brazil Fund, and Global Emerging Markets Fund
  • Suspension covers lumpsum purchases, switch-ins, and fresh SIP/STP/IDCW Transfer Plan registrations
  • Existing SIP, STP, IDCW Transfer Plan, and SWP installments will continue to be processed
  • Switch-outs, redemptions, switches between Plans/Options, and fresh SWP registrations remain unaffected
  • All fresh applications received after 3:00 PM cut-off time on December 03, 2025 will be rejected and refunded within 5 business days
  • Suspension is based on SEBI’s directive from June 17, 2022 regarding overseas investment headroom limits

Regulatory Changes

This circular implements SEBI’s existing regulatory framework from its letter dated June 17, 2022, which permits AMCs to make investments in overseas funds/securities only up to the headroom available without breaching the overseas investment limits as of February 1, 2022 at the Fund level. No new regulatory changes are introduced; this is compliance with existing regulations.

Compliance Requirements

  • HSBC Mutual Fund must not accept new subscriptions in the four designated schemes through restricted channels
  • Fund must continue processing existing commitments (ongoing SIPs, STPs, etc.) subject to available headroom
  • Fund must monitor overseas investment headroom to ensure compliance with February 1, 2022 limits
  • Processing of existing SIP and IDCW Transfer Plan installments where designated schemes are target schemes will be reviewed based on available headroom
  • Rejected applications received after cut-off time must be refunded within 5 business days

Important Dates

  • December 03, 2025: Effective date of suspension (close of business hours)
  • 3:00 PM, December 03, 2025: Cut-off time for fresh applications; applications received after this time will be rejected
  • Until further notice: Duration of suspension continues until SEBI/RBI enhances overseas investment limits or headroom increases

Impact Assessment

Investor Impact: High - Investors seeking to make new investments in these four HSBC schemes are completely blocked from doing so. New investors cannot enter these schemes, and existing investors cannot add to their positions through lumpsum or fresh systematic plans. However, existing systematic plans continue to operate, providing some relief to current investors.

Market Impact: Medium - This reflects broader industry challenges with overseas investment limits affecting multiple AMCs. The suspension indicates that HSBC has reached or is approaching its overseas investment ceiling, potentially signaling strong investor interest in international funds or constrained regulatory limits.

Operational Impact: The suspension is temporary and reversible once SEBI/RBI enhances limits or the fund’s headroom increases through redemptions or limit expansions. The fund must maintain operational capability to quickly resume subscriptions when limits allow.

Affected Schemes:

  1. HSBC Global Equity Climate Change Fund of Fund
  2. HSBC Asia Pacific (Ex Japan) Dividend Yield Fund
  3. HSBC Brazil Fund
  4. HSBC Global Emerging Markets Fund

Impact Justification

High importance as it immediately restricts investor access to four HSBC mutual fund schemes. High impact on existing and potential investors in these schemes, preventing new investments until overseas investment limits are enhanced.