Sebi’s overlap rules likely to push MFs to passive funds

vice chairman and chief executive officer at Mirae Asset Investment Managers.

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Passive funds don't need active management.

(ISTOCKPHOTO)

‘The next phase of growth may be in factor-based passive funds, a subcategory of passive schemes that extend beyond plain-vanilla index trackers.

Factor-based passive products track indices constructed on parameters such as higher returns on equity, stronger dividend yields, lower volatility or quality metrics. They could see greater traction as AMCs look to offer differentiated yet rules-based exposures.

“Mutual funds can look at creating factor-based passive products which are based on rules such as including stocks of better ROE or those with better dividend yield,” Doshi said.