Tuesday, November 24, 2020
Home Business News Debt MFs must invest 10% in liquid assets, says Sebi - Times...

Debt MFs must invest 10% in liquid assets, says Sebi – Times of India


MUMBAI: In a ruling that will impact most debt funds, markets regulator Sebi has mandated that these schemes hold at least 10% of their assets in liquid instruments like cash, government securities (G-Secs), treasury bills and repo on G-Secs. The move is aimed at making debt funds less risky, especially during times of unusual falls in turnover in the bond market. However, overnight, liquid and gilt schemes have been exempted from this rule since a major part of the portfolio of these schemes are invested in liquid assets.
Effective February 1, 2021, the rule change come a little over six months after Franklin Templeton Mutual Fund decided to close down six debt funds, mainly due to its inability to sell bonds from its portfolio to meet increasing redemption pressure. On April 23, the fund house had announced the closure of six debt schemes, which then had assets worth about Rs 26,000 crore and over three lakh investors.
The change in rules, was necessitated “to augment the liquidity risk management framework for all open-ended debt schemes”, a Sebi circular said. The regulator also said that fund houses should do stress testing for all debt schemes other than overnight schemes. In case the exposure in such liquid assets falls below the 10% threshold, the fund house should “ensure compliance with this requirement before making any further investments”, the Sebi circular said.
Through another circular, the markets regulator also allowed fund houses to launch flexi-cap schemes, which can invest in stocks from across the market cap spectrum. The decision came nearly two months after the regulator had changed the rules for multi-cap funds by mandating these schemes to compulsorily invest 75% of their portfolio across three market cap categories — large, mid and small — divided equally between the three.
In a separate note, Sebi said that from November 9, the cut-off timings to invest in mutual funds would be restored to the pre-Covid deadline of 3pm for all schemes.



Source link

Avatar
Sahilhttp://digitalguruji.org
In this blog our main motive is to provide you all kind of latest information about technology, politics, sports, and health. If you want to read this information then you should have to visit our website. This information will help you to increase your knowledge.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular

NSE declares Karvy Stock Broking as defaulter, expels it from membership – Times of India

HYDERABAD: A year after an investigation by the National Stock Exchange (NSE) blew the lid of the Karvy Stock Broking Ltd (KSBL) demat...

SSB Assistant Sub Inspector admit card released, download here – Times of India

NEW DELHI: Sashastra Seema Bal (SSB) has released the SSB Assistant Sub Inspector (Stenographer) admit card on its official website. The candidates who...

Coronavirus vaccine: Are there people who cannot get vaccinated? | The Times of India

While different groups are working on protocols to make vaccines workable for all ages and vulnerable groups, we do know that any vaccine...

John Kerry, who signed Paris accord for US, is Biden’s climate envoy – Times of India

WASHINGTON: Former secretary of state John Kerry helped broker the landmark Paris Agreement and signed it on behalf of the United States, a...

Recent Comments