Sebi overhauls MF rulebook

THE SECURITIES AND Exchange Board of India (Sebi) on Thursday unveiled sweeping changes for the ₹81 lakh crore mutual fund industry, aimed at making schemes more “true to label” in portfolio construction.

- KUSHAN SHAH & JOYDEEP GHOSH

The overhaul scraps solution-oriented schemes, introduces lifecycle funds, widens exposure limits for gold, silver and infrastructure investment trusts (InvITs), and caps portfolio overlap across schemes.

Mutual fund houses can no longer accept fresh inflows into solution-oriented schemes — retirement and children's funds — which together manage about ₹60,000 crore. These will be merged with other schemes having similar asset allocations.

“Sebi has done something it rarely does: admitted a category was pointless and killed it.

Solution-oriented funds were always a labelling exercise, and their removal is long overdue,” said Dhirendra Kumar, CEO, Value Research.

Fund houses can now invest up to 35% of a scheme’s assets in gold, silver and InvITs. This gives equity funds greater flexibility in deploying money beyond traditional equity and money market instruments.

Industry experts expect this to create incremental demand for gold and silver, which have rallied sharply over the past year amid global uncertainties.