SEBI Changes MF rules : SEBI has made important changes in the mutual fund rules. As per the revised rules of the capital market regulator, fund houses will have to invest in their schemes as per the prevailing risk levels to ensure ‘Skin in the game’. With this initiative, those managing the fund will have a stake in it (Skin in the game). This is very important for better management of schemes and for investors.
Will have to invest more in equity funds
SEBI has said in a notification that the Asset Management Company (AMC) will invest in such schemes of mutual funds based on the risks associated with the schemes as may be prescribed by the Board from time to time. As per market experts, mutual funds will need to invest more in riskier schemes like equities while less in low-risk investment schemes like bond funds.
According to the existing rules, one percent of the investment raised through NFO or Rs 50 lakh, whichever is less, has to be invested. SEBI is issuing a notification that Asset Management Companies (AMCs) will have to invest in their respective schemes keeping in mind the risk levels.
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If the rules are violated, the scheme will be closed, money will be confiscated
SEBI has said that if the new provisions are violated, then it can suspend the scheme started by the mutual fund for one year. If any investment has been made in this scheme in the asset management company, then it can also be forfeited. Although it will depend on the circumstances. Before taking any such decision, the concerned AMC will be given full opportunity to present its side. In the notification issued on August 5, it has been said that the new rule will come into force on the 270th day of the notice.