Are mutual funds permitted to make overseas investment ? Describe.

Yes, Mutual Funds are permitted to make overseas investments in: ADRs/GDRs issued by Indian or Foreign Companies; Equity of overseas companies listed on recognised stock exchanges overseas; Initial and follow-on public offerings listing at recognised stock exchanges overseas; Foreign debt securities in countries with fully convertible currencies, short-term as well as long-term debt instruments with a rating not below investment grade by accredited/registered credit rating Agencies; Money market instruments rated not below investment grade; Repos in the form of investment, where the counterparty is rated not below investment grade; repos should not, however, involve any borrowing of funds by mutual funds; Government securities where the countries are rated not below investment grade; Derivatives trading on recognised stock exchanges overseas only for hedging and portfolio balancing with underlying securities; Short-term deposits with banks overseas where the issue is rated not below investment grade; Units/securities issued by Overseas Mutual Funds or unit trusts registered with Overseas regulator and investing in (a) aforesaid securities, (b) real estate investment trusts (REITs) listed in recognized stock exchanges overseas or (c) unlisted Overseas securities (not exceeding 10% of their net assets).