Sunday 6 January 2019

SEBI NOTIFIES AMENDMENTS IN MUTUAL FUNDS REGULATIONS

The Securities and Exchange Board of India (SEBI) is a body under the GOI that regulates the securities market of India. Established in the year 1988, it received statutory powers under the SEBI Act, 1992.  SEBI is the Quasi-Judicial, Quasi–Executive & Quasi-Legislative body & under its legislative capacity, it has the right to draft resolutions, conduct investigations and enforce action.

Practising its powers, SEBI has recently notified a Gazette Notification concerning the Mutual Funds regulation amendments. The notification has been notified on 13th December 2018 while amendments shall come into force on 1st April 2019. This blog has summarized the recent amendments associated with the Mutual Fund regulations so that you make an informed decision before investing.

 Any scheme other than the Index Funds or Exchange Traded Fund, where 65% of the net assets are invested in equity or equity-related investments, the scheme will be known as the Equity Oriented Scheme.

The total expense ratio of the various scheme including the investment and advisory fees is subjected to the following limits:-

1. FUNDS OF FUNDS SCHEME
Should be less than 1% of the daily net assets of the scheme, if the investment is done in Liquid Funds, Index Funds & ETF Funds.
Should be less than 2.25% of the daily net assets of the scheme, if the investment is done in Equity Funds.
Should be less than 2.00% of the daily net assets of the scheme, if the investment is done in Funds, other than those mentioned above.

2. INDEX FUNDS & ETF
Should not exceed 1.00 % of the daily net assets.

3. IN THE CASE OF THE OPEN-ENDED SCHEME (APART FROM THOSE MENTIONED ABOVE) THE TOTAL EXPENSE RATIO OF THE SCHEME SHALL NOT EXCEED THE FOLLOWING LIMITS:

4. CLOSE ENDED & INTERVAL SCHEMES
Should not exceed 1.25 % of the daily net assets in the case of equity oriented schemes.
Should not exceed 1.00 % of the daily net assets in case schemes other than equity oriented schemes.
These amendments shall be effective from 1st of April 2019. The amendments have been taken by SEBI in the investor’s interest. If you find it difficult to understand the amendments taken by SEBI or if it is a herculean task for you take wise investment decision post-amendments, then you should contact your Financial Advisor, who will assist & guide you about the Mutual Fund amendments. He will also help you pick the right fund for investment post-amendment.



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