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Sebi Tightens Norms For Debt-Oriented MF Schemes

Monday, June 23, 2014
By A Business Reporter

Concerned over debt-oriented mutual funds schemes having low asset base, Sebi said such schemes should collect at least Rs 20 crore at the time of new fund offer. Besides, the capital market watchdog has directed the mutual funds to maintain an average asset under management (AUM) of Rs 20 crore on half yearly rolling basis for open ended debt oriented schemes.

"The minimum subscription amount of debt oriented and balanced schemes at the time of new fund offer shall be at least Rs 20 crore and that of other schemes shall be at least Rs 10 crore," Securities and Exchange Board of India (Sebi) said in a circular. According to Sebi, the requirement of having at least Rs 20 crore AUM on half yearly rolling basis should be compiled within one year by all existing open ended debt oriented schemes.

"It has been observed that many debt oriented schemes are operating with a very low AUM," the Securities and Exchange Board of India (Sebi) said in a circular on Friday. "In the interest of investors, it is important that debt oriented schemes have an adequate corpus to ensure adherence to the investment objectives...," the market regulator added. In case of non-compliance with Sebi directives on AUM, the Asset Management Company (AMC) would have to scale up the AUM of such scheme within a period of six months, failing which the board may ask the scheme to be wound up.

"The confirmation on compliance... Shall be reported to Sebi in the half yearly trustee reports," the circular said. Last month, the mutual fund industry's assets under management crossed Rs 10 lakh crore, mainly helped by strong capital inflows and a surge in equity markets. The assets under management (AUM) of mutual funds rose to Rs 10.11 lakh crore in May from Rs 9.45 lakh crore in April, a growth of seven per cent.

Mutual Fund Update
Change in exit load announced under Religare Invesco Medium-Term Bond Fund

Religare Invesco MF has announced change in exit load structure under Religare Invesco Medium-Term Bond Fund, an open-ended income scheme, with effect from June 16. Accordingly, if redeemed/switched-out on or before six months from the date of allotment, the exit load will be 1% and nil thereafter.

JP Morgan MF launches JPMorgan Emerging Markets Opportunities Equity Offshore Fund
JP Morgan MF has launched JPMorgan Emerging Markets Opportunities Equity Offshore Fund, an open-ended fund of funds scheme. The issue will remain open for subscription till June 30. It will be benchmarked against Morgan Stanley Capital International (MSCI) Emerging Markets Index (Total Return Net) and will be managed by Namdev Chougule.

Change in minimum application amount announced under Union KBC Small and Midcap Fund
Union KBC MF has changed the minimum application amount for SIP facility under Union KBC Small and Midcap Fund. The revised amount for monthly frequency is Rs. 2000 and for quarterly frequency, the amount is Rs. 5000. The change will come into effect from June 19.

Religare Invesco MF announces change in fund managers
Religare Invesco MF has announced change in the fund managers of five of its schemes. Accordingly, Religare Invesco Business Leaders Fund, which was earlier managed by Vetri Subramaniam will now be jointly managed by Vetri Subramaniam & Vinay Paharia. Religare Invesco Growth Fund, which was jointly managed by Vetri Subramaniam & Vinay Paharia, will now be managed by Vetri Subramaniam and Amit Ganatra. In case of Religare Invesco Infrastructure Fund, the fund will be managed by Pranav Gokhale. Earlier, it was jointly managed by Amit Ganatra & Pranav Gokhale. In case of Religare Invesco Liquid Fund and Religare Invesco Ultra Short Term Fund, the funds will now be managed by Krishna Cheemalapati & Nitish Sikand. Earlier, they were managed by Krishna Cheemalapati. The change will be applicable from June 23.

BNP Paribas MF announces change in face value of BNP Paribas Overnight Fund
BNP Paribas MF has changed the face value of BNP Paribas Overnight Fund from exisiting Rs.10 to revised Rs.1000. The change will be effective from June 28.

Edelweiss MF revises exit load under Edelweiss Liquid Fund
Edelweiss MF has announced change in exit load structure under Edelweiss Liquid Fund with effect from June 19. Accordingly, if the units are redeemed / switched-out within one day from the date of allotment and if the units are redeemed / switched-out after two days from the date of allotment, the revised exit load structure will be nil. The revised exit load shall be applicable on a prospective basis in respect of subscriptions in the scheme on and after the effective date.

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