SEBI has introduced a new asset class called “Investment Strategies” for HNIs and also announced a simplified “MF Lite” framework for index-tracking passive funds.
Investment Strategies
AMCs can now offer riskier products including long-short equity investment strategies for a minimum investment of ₹10 lakh per investor. This will bridge the gap between mutual funds and PMS (Portfolio Management Services) and allow HNIs to get equity derivatives exposure who have a high-risk appetite.
Here no leverage, no unlisted investment, and no unrated instruments are considered. There is a limit of only 25% of AUM on derivatives exposure besides needed for hedging and rebalancing.
MF Lite Framework
The all-new MF Lite framework for the AMCs launching only passive mutual funds will have easier regulations in terms of eligibility criteria for sponsors, net worth, profitability, trustees’ responsibilities, approval process, and other disclosures.
It promotes the introduction of new passive mutual funds while improving liquidity and creating more options in the market.
Existing AMCs can choose to separate their passive funds in the new entity to take benefit of MF Lite regulations. Also, within the same entity, they can still enjoy these regulations if the underlying indices of the funds are covered in the new framework.
Keep reading and open demat account on SMC Global Securities to start investing in this revolutionizing market.
Reference
https://www.livemint.com/mutual-fund/mutual-funds-what-are-the-sebis-new-rules-for-introducing-investment-strategies-passive-mutual-funds-11727778363100.html
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