Sebi move puts ₹57k cr investor money in limbo

The Indian market regulator's decision to discontinue solution-oriented schemes such as education and retirement funds offered by mutual fund houses has left ₹57,664 crore of investor money in limbo, with uncertainty over what will happen to the investments.

- Apoorva Ajith

For Nandish Dholakia, a 28-year-old investor from Gujarat, the investment was never meant to be tactical—it had a destination. Almost a year ago, he started investing in an SBI Children’s Fund for his niece's education, drawn by a structure that locked the money away from the temptations of market timing. That certainty has now evaporated following the Securities and Exchange Board of India's (Sebi's) decision.

“Sebi is arguing that AMCs (asset management companies) are giving emotional names and taking money, which is not good for investor protection, but all schemes have documents elaborating on all the information about a scheme,” Dholakia said.

Children’s funds, by design, prevent withdrawals until the passage of five years or until the child turns 18. That constraint, he said, helped investors stay committed to the financial goal.

“Since the children’s fund had a lock-in, I could not take out that money, no matter how the markets were performing. I was investing with a purpose in mind.”

Sebi’s 26 February decision was part of a broader push to ensure that portfolios of schemes within a fund house are materially different from each other and provide value to investors.