New Delhi, Market regulator SEBI has streamlined the norms for passive funds - index funds and exchange traded funds (ETFs) - related to exposure to securities of the sponsor's group companies to provide a level playing field for mutual funds.
In a notification on Tuesday, the Securities and Exchange Board of India (SEBI) has amended mutual fund rules, allowing equity-oriented ETFs and index funds to now invest more than 25 per cent of the net worth in listed securities of the sponsor's group companies. . Properties.
Earlier, mutual fund schemes were not allowed to invest more than 25 per cent of their net asset value (NAV) in group companies of the sponsor.
This has prohibited passive funds from effectively replicating the underlying index, in cases where the sponsors' group companies hold more than 25 per cent of the index.
This has put such asset management companies (AMCs) at a relative disadvantage compared to other AMCs, which cannot have a sponsor group company of more than 25 per cent in the underlying index.
To streamline norms and create a level playing field for all AMCs, Sebi's board in April approved amendments to mutual fund rules to allow equity passive schemes to take exposure up to the weighting of the constituents in the underlying index.
However, this exposure will be subject to the overall limit of 35 per cent investment in group companies of the sponsor, Sebi had said.
In a notification on Tuesday, the Securities and Exchange Board of India (SEBI) has amended mutual fund rules, allowing equity-oriented ETFs and index funds to now invest more than 25 per cent of the net worth in listed securities of the sponsor's group companies. . Properties.
Earlier, mutual fund schemes were not allowed to invest more than 25 per cent of their net asset value (NAV) in group companies of the sponsor.
This has prohibited passive funds from effectively replicating the underlying index, in cases where the sponsors' group companies hold more than 25 per cent of the index.
This has put such asset management companies (AMCs) at a relative disadvantage compared to other AMCs, which cannot have a sponsor group company of more than 25 per cent in the underlying index.
To streamline norms and create a level playing field for all AMCs, Sebi's board in April approved amendments to mutual fund rules to allow equity passive schemes to take exposure up to the weighting of the constituents in the underlying index.
However, this exposure will be subject to the overall limit of 35 per cent investment in group companies of the sponsor, Sebi had said.
