Mutual Funds Rules Change from 1 January 2021: There are going to be some changes in the rules regarding investment in mutual funds from 1 January 2021.
Mutual Funds Rules Change From 1 January 2021: If you are a mutual fund investor then pay attention. There will be some changes in the rules regarding investment in mutual funds from January 2021. However, all these changes have been made keeping in mind the interests of investors. After the implementation of these changes, the method of investing in mutual funds will change somewhat. The market regulator believes that these changes were necessary for investors to make mutual funds safe and transparent. These include a change in NAV calculation, right from identifying risk in mutual funds to investors, making investments in multi cap more transparent. All these changes were announced this year, which will be implemented from the new year.
Change in NAV calculation
In a circular issued on September 17 this year, SEBI announced a change in the NAV calculation in the mutual fund scheme. The new rules will be effective from 1 January 2021. From January 1, 2021, investors will get the net asset value of the mutual funds of that day after the money reaches the NAV Asset Management Company (AMC). According to SEBI, the day’s closing in all mutual fund schemes, except liquid and overnight mutual fund schemes, will be decided on the basis of the funds available for NAV utilization. As per the existing rules, same-day NAV is applied in purchases of less than Rs 2 lakh and the order is placed, irrespective of whether the money has been delivered to AMC or not.
Judging from high risk, we will be able to take a decision
Investment in mutual funds is subject to risk. But sometimes investors are not able to identify high risk accurately. Sebi has announced the introduction of “very high risk” category from 1 January 2021, so that investors can properly identify the risk of mutual funds. All mutual funds will now have to show 6 signals in the risk-o-meter instead of 5. Apart from “very high risk” category, the other 5 categories are Low, Moderate Low, Moderate, Moderate High and High.
Investment method will change in multi cap
SEBI has changed the rules for asset allocation for multi cap mutual fund categories. The new rules will come into effect from 1 January 2021, although fund houses have been given time till 31 January 2021 for this. According to the new rule, 75 percent of the funds will now be required to invest in equity, which is currently a minimum of 65 percent. Fund houses will be required to invest 25-25 per cent in large-cap, midcap and smallcap. Explain that earlier fund managers used to allocate according to their convenience, due to which large-cap weightage is more in multi-cap.
Rules will be changed for inter scheme transfer
SEBI has taken measures to tighten the standards of inter scheme transfer to protect the interests of mutual funds investors. From January 1, 2021, inter-scheme transfer of closed-end funds will be required by the investors within 3 business days of the unit being allotted. According to the market regulator, the inter-scheme can be transferred only after a fund house tries to increase liquidity and ends. These will include the use of cash and cash equivalent assets available in the schemes and the sale of scheme assets in the markets.