Mutual funds have gone through several regulatory changes this year that are due to expire soon. In order to make mutual funds more transparent and safe for investors, Sebi has introduced some measures that will be effective in the new year. Some of these changes will take effect on January 1, 2021. Here's the list:
A change in the rules for portfolio allocation to multi-capital mutual funds
Sebi, in September, revised the portfolio allocation rules for multi-capital mutual fund plans. These new rules will go into effect next year. Under the new rules established by Sebi, the multi-capital mutual fund plan will have to invest at least 75% in stocks. Also, from now on, these charts will have to invest at least 25% each in large, medium and small stocks. Currently there are no allocation restrictions and fund managers can invest using the market capitalization of their choice. Currently, the minimum capital allocation should be 65%.
Sebi had allowed until January 31, 2021 for mutual fund companies to comply with the latest rules, within a month from the date AMFI published the following list of stocks.
After concern in the industry, Sebi subsequently introduced a new category of mutual funds called the Flexible Capital Fund required to invest at least 65% of the group in stocks without restrictions to invest in stocks of large, medium or small companies. Some AMCs have already reclassified their multiple capital schemes into the soft ceiling category to avoid any changes in the fund's investment management.
A change in the net asset value account
Beginning January 1, investors will have the purchase net asset value for the day the investor's funds reach AMC, regardless of the size of the investment. “It has been decided that with respect to the purchase of units of mutual fund schemes (excluding liquid and night charts), the closing of the NAV for the day the funds are available for use regardless of size and time reception of these came in the captive circular issued in September. The new NAV rules will not apply to liquid funds or swap funds.
Under current rules, the same-day NAV is considered for purchases of less than $ 2 lakh, even if the funds have not reached the asset management company (AMC), but the order is placed on the spot. of inactivity.
New risk measurement tool
Sebi has introduced a new “very high” risk class in its risk measurement tool for investors to make better decisions with higher risk mutual funds. It replaces the old model simply based on the scheme class without properly considering your existing portfolio. The new risk metric will go into effect on January 1, 2021. The risk metric will be evaluated monthly and AMCs must disclose the risk metric along with portfolio disclosure for all their charts on their website and on the AMFI website within 10 days after the end of each month.
Mutual funds must also post a history of changes in the risk indicator each year. In addition, any change in the risk scale must be communicated to the unit owners in this specific system.
Rename the dividend option
Beginning in April 2021, mutual funds will have to rename dividend options as income distribution with capital withdrawal.
Transfers between charts
As of January 1, 2021, transfers between schemes in closed funds can only be made within 3 business days after the system units are allocated to investors and not after. Sebi released a post in October. Inter-system transfers involve the transfer of debt securities from one common fund scheme to another. Under current rules, Sebi only requires that ISTs be executed at market rates and that the transfer be consistent with the investment objective of the recipient's system.
Sebi also clarified that IST teams are not allowed if there is negative market news, rumors about security in the mainstream media or a security alert generated when evaluating the internal risk of the fund in the previous four months.
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