📰 SEBI’s Latest Mutual Fund Reforms: A Step Towards Clarity and Better Risk Management
The Securities and Exchange Board of India (SEBI) has introduced a series of proposed reforms to bring greater transparency, clarity, and structure to mutual fund schemes. These changes aim to help investors make more informed decisions while ensuring better compliance and flexibility for fund houses.
🔑 What’s New in SEBI’s Mutual Fund Guidelines?
1. Value vs. Contra Funds – Both Allowed with Limits
SEBI now allows both value and contra funds within the same AMC, provided they maintain less than 50% portfolio overlap to ensure clear strategy differentiation.
2. Mandatory Portfolio Overlap Monitoring
Fund houses must conduct overlap checks during NFOs and at six-month intervals to ensure schemes remain distinct and investors aren't unknowingly exposed to similar risks.
3. Flexible Residual Investments for Equity & Debt Funds
Surplus funds in equity and debt schemes can now be deployed in alternate assets such as:
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REITs
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InvITs
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Gold and other permissible avenues
This provides better utilization and diversification of idle assets.
4. Debt Fund Naming Gets a Makeover
To enhance investor understanding, SEBI proposes renaming debt funds by replacing the term “Duration” with “Term” (e.g., 1–3 years, 3–5 years), providing a clearer view of investment horizons.
5. Sectoral Debt Funds Permitted with Conditions
New guidelines allow sector-specific debt funds, but with regulatory checks and disclosures to reduce concentration risks.
6. Hybrid & Solution-Oriented Funds – Streamlined Structure
SEBI is introducing defined structures, including:
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Clear lock-in periods
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Transparent asset allocation rules
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Consistent fund classification
📊 Why These Changes Are Important
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🔁 Reduces portfolio overlap and duplication
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💡 Improves transparency for retail investors
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📘 Easier to compare and understand schemes
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🔧 Gives AMCs more flexibility in fund management
🎯 Key Actions for Fund Managers
Fund managers must adapt quickly to remain compliant:
✅ Track and manage scheme overlap proactively
✅ Realign portfolios if market fluctuations cause breaches
✅ Update scheme names and align with the appropriate time horizon
✅ Ensure deployment of NFO proceeds within 30 days
✅ Maintain updated, audit-ready documentation
✅ Use dual scheme structures strategically and responsibly
📞 Need Expert Guidance?
Understanding and implementing SEBI’s new rules can be complex. If you’re a fund manager, AMC, or compliance executive, our team can help you navigate these reforms with confidence.
📞 Book your free consultation today
+91 93113 47006
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#SEBI #MutualFunds #FundManagers #SEBIGuidelines #InvestmentStrategy #NBFCAdvisor #InvestorAwareness #AssetManagement #Compliance