Sebi to Review Categorisation of Mutual Fund Schemes

The proposal came after Sebi noted a significant overlap of portfolios in some schemes and felt the necessity to introduce clear limits to the industry to avoid schemes with similar portfolios.

- AGENCIES

Markets regulator Sebi on Friday proposed to review the categorisation of mutual fund schemes in a bid to improve clarity and address the issue of overlap in portfolios of schemes.

The proposal came after Sebi noted a significant overlap of portfolios in some schemes and felt the necessity to introduce clear limits to the industry to avoid schemes with similar portfolios.

In its consultation paper, Sebi suggested that mutual funds should be permitted to offer both Value and Contra funds, subject to the condition that no more than 50 per cent of the schemes' portfolios would overlap at any point in time.

The overlap condition should be monitored at the time of New Fund Offer (NFO) deployment and subsequently on a semi-annual basis using month-end portfolios.