AMCs must declare the sectors they will avoid investing in for new FMPs.
New FMP prospectuses will contain a sector exclusion list as per SEBI’s new rule. Fund houses have to share the restricted sector list with investors so that they are aware where their money would be invested.
“SEBI has made it mandatory for new FMPs to mention the sectors that we would refrain from investing in. This is mainly because the regulator wants to control investment in risky assets. All AMCs are supposed to provide a sector exclusion list with its FMP prospectus,” said an official of a large fund house.
FMPs invest large sums of money in certain, selected sectors with a view to make profits. However, in 2008-09, many investors lost money in FMPs. As every house is busy launching FMPs, SEBI is making sure that this time AMCs do not break the confidence of the investors.
Beside FMPs, the regulator is also closely monitoring a few other funds like gold and infrastructure, an industry expert informed Cafemutual. SEBI is trying to make the mutual fund industry more transparent so that more investors are drawn towards mutual fund investments.
