The SEBI board has permitted a new investment product under the existing Mutual Fund framework so that the proliferation of unregistered and unauthorized investment schemes/entities does not affect the investors, who are often misled by unrealistic high returns and are fleeced on the basis of their expectations about better yields, which can lead to financial risk.
The markets regulator categorizes the new asset class as one that is destined to fill the gap between mutual funds and Portfolio Management Services in terms of flexibility in portfolio construction.
The new product, Mutual Fund, introduces by SEBI is exactly designed to offer investors a professionally managed, well-regulated investment plan, which allows greater flexibility, greater risk-taking ability for a higher ticket size, in an environment where appropriate safeguards and measures to mitigate the risk are available.
Example: Protections under the new product shall be; no leverage, no investment in unlisted and unrated instruments beyond those already permitted for Mutual Funds, and derivatives exposure to be capped at 25% of AUM for the purposes other than hedging and rebalancing. "
Offerings under the new product shall be called as 'Investment Strategies', to avoid confusion with schemes available under the traditional Mutual Funds.
The minimum investment limit of the new product will be Rs 10 lakh per investor in all the investment strategies of the new product under a single AMC.
According to reports, draft circular about derivatives regulation will be released soon as the individual traders in the futures and options (F&O) market are incurring immense loss.
The aggregate losses of individual traders in the equity futures and options segment over the three-year period of FY22-FY24 stand at an astonishing amount of Rs 1.8 lakh crore, as recently revealed by a SEBI report. Nine out of ten such individual traders still suffer huge losses.
SEBI Chairperson Madhabi Puri Buch also recently said that the markets regulator is at the threshold of bringing in MF lite regulations, where has had detailed consultations on the subject.
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