Sebi tweaks norms for mutual fund investments in listed securities of sponsor
New Sebi rules now permit equity-oriented ETFs and index funds tracking widely followed and non-bespoke indices to invest in accordance with the weightage of the constituents of the underlying index, subject to an overall cap of 35% of net asset value of the scheme in the group companies of the sponsor
No mutual fund scheme will be able to make any investment in the listed securities of group companies of the sponsor in excess of 25% of the net assets of the scheme, according to a circular issued by the () on Monday.However, equity-oriented exchange traded funds (ETFs) and index funds based on widely tracked and non-bespoke indices can make investments in accordance with the weightage of the constituents of the underlying index, subject to an overall cap of 35% of net asset value of the scheme in the group companies of the sponsor, the circular said.
Widely tracked and non-bespoke indices are tracked by passive funds or act as primary benchmarks for actively managed funds with collective assets under management (AUM) of Rs 20,000 crore and above, the circular said.
Sebi has identified 21 widely tracked and non-bespoke indices based on AUM as on June 30, 2024.
The list of indices based on the above criteria will be determined on half-yearly basis as per the above specified AUM threshold as on March 31 and September 30, respectively, and the list will be updated by AMFI and published on its website by April 15 and October 15th respectively, every year, after seeking Sebi’s approval.
Meanwhile, passive schemes based on underlying indices, other than those mentioned above, will be rebalanced within 30 business days from the date of issuance of this circular.
On failure to rebalance portfolios, the investment committee of the AMC will be required to give its explanation within 30 business days. However, the investment committee will be allowed to extend the timeline for rebalancing up to 60 business days from the date of completion of the mandated rebalancing period.
The move comes after public consultation on the recommendations of the working group and deliberations in the Advisory Committee (MFAC). It has been done to streamline the existing norms applicable for investments by passively managed mutual fund schemes in the group companies of their sponsors.
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Source: Stocks-Markets-Economic Times
