To propose a new mutual fund category for high-risk funds that offers investors a chance to earn higher returns, the Securities and Exchange Board of India (Sebi) has written to the Association of Mutual Funds of India (AMFI). The funds for the proposed field will be allowed to invest in long-short strategies, junk bonds and microcap stocks.
As per their risk factor, the existing five categories at present are - low, low to moderate, moderate, moderately high, and high. Sebi has sought the industry's views about the structure of the proposed scheme and the asset allocation in its letter to AMFI.
If any relaxations are required in the current regulatory requirements, the industry has also been asked to recommend for the same. Furthermore, the fund houses have also been asked to recommend the minimum investment size of the funds.
This move is aimed at making high-risk, high return Portfolio Management Services (PMS) accessible to retail investors, as per the industry sources who told CNBC TV18. PMS funds have a minimum ticket size of Rs 50 lakh which is colossus for most retail investors at present.
By October 25, Sebi had asked AMFI to submit comments from the industry. Having said that, the report said that the industry body is still in consultation with the fund houses and hasn’t submitted the responses.
At Rs 13,857 crore in September 2023, AMFI recent data showed that equity mutual fund inflows slipped month-on-month. As of September 30, the asset under management (AUM) of the mutual fund industry stood at Rs 46.58 lakh crore. From the previous month's Rs 18.6 lakh crore, the equity AUM contribution shot up marginally to Rs 19.08 lakh crore.
Large-cap funds and ELSS funds or the tax-saving funds in September were outperformed by Mid and smallcap funds. As a reduction from the Rs 4,265 crore recorded in August, Smallcap fund inflows stood at Rs 2,678 crore. From Rs 2,512 crore to Rs 2,001 crore, Midcap funds, while still attracting investments, saw a decrease in inflows. Furthermore, as compared to Rs 349 crore of outflows in August, Large caps saw an outflow of Rs 110.6 crore.
