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Creation of segregated portfolio in mutual fund schemes- (Securities and Exchange Board of India) (07 Nov 2019)

MANU/SMFD/0016/2019

Capital Market

1. In partial modification to SEBI Circular No. SEBI/HO/IMD/DF2/CIR/P/2018/160 dated December 28, 2018 on 'Creation of segregated portfolio in mutual fund schemes', it has been decided to permit creation of segregated portfolio of unrated debt or money market instruments by mutual fund schemes of an issuer that does not have any outstanding rated debt or money market instruments, subject to the following:

a. Segregated portfolio of such unrated debt or money market instruments may be created only in case of actual default of either the interest or principal amount. As per SEBI circular dated December 28, 2018, credit event is considered for creation of segregated portfolio, however for the purpose of this circular 'actual default' by the issuer of such instruments shall be considered for creation of segregated portfolio.

b. AMCs shall inform AMFI immediately about the actual default by the issuer. Upon being informed about the default, AMFI shall immediately inform the same to all AMCs. Pursuant to dissemination of information by AMFI about actual default by the issuer, AMCs may segregate the portfolio of debt or money market instruments of the said issuer in terms of SEBI circular dated December 28, 2018.

c. All other terms and conditions as stated in SEBI circular dated December 28, 2018 shall remain the same.

2. Paragraph C-3 of the aforesaid circular stands modified as under:

"Creation of segregated portfolio shall be optional and at the discretion of the AMC. It should be created only if the Scheme Information Document (SID) of the scheme has provisions for segregated portfolio with adequate disclosures. All new schemes to be launched after the date of this circular shall have the enabling provisions included in the SID for creation of segregated portfolio"

Tags : SEGREGATED PORTFOLIO   MUTUAL FUND SCHEMES   CREATION  

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