Investing hard-earned money in mutual funds? Sebi's big decision for select AMCs

There is an important development for you to know especially if your hard-earned money has been invested in mutual funds? Taking a big decision, markets regulator Sebi has allowed mutual funds to make additional investment in government securities and treasury bills while deciding on investment avenues for their corporate bond, banking, PSU and credit risk funds. This follows a request from industry body Amfi (Association of Mutual Funds in India) and fund houses seeking an increase in exposure of government securities in mutual fund schemes.

In a letter to Amfi, Sebi said asset management companies (AMCs) can invest an additional 15 per cent of assets under management (AUM) of corporate bond, banking and PSU and credit risk funds in government securities and treasury bills, as per a report in PTI. It further said that such additional investment in government securities and treasury bills is optional for mutual funds. This has been allowed for a period of three months, the Securities and Exchange Board of India (Sebi) said.

Also, the regulator has revised the scheme characteristic for corporate bond, banking and PSU and credit risk funds. Sebi said corporate bond funds have to invest 65 per cent of total assets in AA+ and above-rated papers, while banking and PSU funds need to invest 65 per cent of the assets in debt instruments of banks, PSUs, public financial institutions and municipal bonds.

Credit risk funds have to make a minimum investment of 50 per cent of assets in AA and below-rated papers, Sebi said. This comes after Franklin Templeton MF shut its six debt schemes citing redemption pressures and lack of liquidity in the debt market.Investing hard-earned money in mutual funds? Sebi's big decision for select AMCs

There is an important development for you to know especially if your hard-earned money has been invested in mutual funds? Taking a big decision, markets regulator Sebi has allowed mutual funds to make additional investment in government securities and treasury bills while deciding on investment avenues for their corporate bond, banking, PSU and credit risk funds. This follows a request from industry body Amfi (Association of Mutual Funds in India) and fund houses seeking an increase in exposure of government securities in mutual fund schemes.

In a letter to Amfi, Sebi said asset management companies (AMCs) can invest an additional 15 per cent of assets under management (AUM) of corporate bond, banking and PSU and credit risk funds in government securities and treasury bills, as per a report in PTI. It further said that such additional investment in government securities and treasury bills is optional for mutual funds. This has been allowed for a period of three months, the Securities and Exchange Board of India (Sebi) said.

Also, the regulator has revised the scheme characteristic for corporate bond, banking and PSU and credit risk funds. Sebi said corporate bond funds have to invest 65 per cent of total assets in AA+ and above-rated papers, while banking and PSU funds need to invest 65 per cent of the assets in debt instruments of banks, PSUs, public financial institutions and municipal bonds.

Credit risk funds have to make a minimum investment of 50 per cent of assets in AA and below-rated papers, Sebi said. This comes after Franklin Templeton MF shut its six debt schemes citing redemption pressures and lack of liquidity in the debt market.