New Delhi, March 11 -- After a year in which international equities outperformed domestic markets, more investors are waking up to the importance of global diversification. However, with the regulatory overseas investment ceiling, the options are limited.

The Securities and Exchange Board of India (Sebi) and the Reserve Bank of India have set an overseas investment ceiling of $7 billion for the entire mutual fund industry and $1 billion per asset management company. Once these limits are reached, funds will have to stop fresh inflows.

Global equity schemes allow investors to tap opportunities across markets worldwide. The category has grown sharply, from just one scheme in 2007 to more than 60 today, with assets under management rising ...