Informist mumbai

The Securities and Exchange Board of India on Tuesday released the Mutual Fund Lite framework for passively managed schemes of mutual funds, which will come into effect from Mar. 16.

The SEBI board had on Sept. 30 approved the framework to promote ease of entry and encourage new players, reduce compliance requirements, enhance market liquidity and facilitate investment diversification.

The framework allows all asset management companies, whether registered under MF Lite or the mutual fund regulations, to launch Hybrid Passive Funds, the regulator said in a circular. These funds will replicate a composite index consisting of equity and debt, allowing investors to invest in a single product that has exposure to both instruments.  

The circular specified that asset management companies can launch hybrid passive schemes only in three categories - balanced with 40-60% in equity and 40-60% in debt, equity-oriented with 65-80% of equity and 20-35% debt, and debt-oriented with 65-80% in debt and 20-35% in equity. 

Asset management companies can launch one exchange-traded fund and one index fund in each category. The minimum subscription amount at the time of a new fund offer for hybrid ETFs or index funds should be INR 100 million.