Market regulator Securities and Exchange Board of India (SEBI) has launched some new guidelines as a way to make mutual funds extra clear for traders. These new guidelines will become effective in 2021.
Here’s a listing of recent mutual fund guidelines that can become effective from 2021:
New rule on the portfolio mixture of multicap funds
Market regulator SEBI in September modified the asset allocation guidelines for multicap mutual fund schemes, which put money into shares of large cap, midcap and small cap corporations.
It has advised multicap funds {that a} minimal of 75 % of their corpus ought to be invested in equity and equity-linked schemes, with impact from February 2021. Currently, multicap funds are required to invest a minimal of 65 % of their corpus in equity and equity-linked instruments.
From February, fund managers may even have to make sure that they make investments a minimal of 25 % of the corpus in every of the three classes of shares which can be a part of a multicap fund—large caps, midcaps, and small caps. There is not any such restriction at current.
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Change in NAV calculation
According to the brand new guidelines, from January 1, traders will buy NAV of the day when investor’s money reach AMC, no matter the size of the investments.
With respect of the purchase of units of mutual fund schemes (except liquid and overnight schemes), closing NAV of the day shall be relevant on which the funds are available for utilization no matter the size and time of receipt of such application.
Inter-scheme transfer
SEBI in October mentioned it is going to prohibit the usage of inter-scheme transfers (ISTs) by debt mutual funds. It mentioned inter-scheme transfers might solely be completed after different avenues of elevating liquidity are tried and exhausted by a fund house. This would take impact from January 2021.
Under current guidelines, inter-scheme transfers happen at market costs and happen in conformity with an investment objective of the receiving scheme.
Also Read – 10 Ways to Generate Passive Income.
Labeling norms of dividend possibility
SEBI has requested the fund houses to make use of the nomenclature ‘income distribution cum capital withdrawal’ as a substitute of the word dividend whereas specifying the plans of the schemes. Hence mutual funds’ dividend payout schemes will probably be renamed ‘Payout of Income Distribution cum capital withdrawal option.’ Similarly, dividend reinvestment and dividend switch plans will probably be renamed. These modifications will probably be applied by April 1, 2021.
SEBI (Market regulator Securities and Exchange Board of India) has launched some new guidelines as a way to make mutual funds extra clear for traders.