Circular on Mutual Funds- (Securities and Exchange Board of India) (15 Feb 2016)
MANU/SMFD/0001/2016
Capital Market
The Securities and Exchange Board of India issued a Circular to ‘put mutual funds in a better position to handle adverse credit events’, reducing the maximum possible sectoral and individualised group investments by a mutual fund. Sectoral exposure in debt oriented mutual fund schemes is reduced from 30 per cent to 25 per cent, and total exposure in a single group cannot exceed 20 per cent of the net assets of the fund (unless the group is public sector organisation). With the reduced limits, mutual funds may be forced to diversify investments, particularly if the funds pegs itself to a specific entity or industry. SEBI’s latest follows closely on the heels of the Securities and Exchange Board of India (Mutual Funds) (Amendment) Regulations, 2016, are aimed at reducing the blowback to fund investors in case debt subscribed to turns out bad.
Relevant : Steps to re-energise Mutual Fund Industry MANU/SMFD/0015/2012
Long Term Policy for Mutual Funds MANU/SMFD/0002/2014
Tags : MUTUAL FUND SECTOR LIMITS GROUP LIMITS DIVERSIFICATION
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