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MF News No more close end equity funds if SEBI do not find offering unique

No more close end equity funds if SEBI do not find offering unique

Also, SEBI may come out with FAQs on mutual fund regulations.
Nishant Patnaik Aug 14, 2018

In a recent meeting of mutual fund advisory committee (MFAC) headed by Arundhati Bhattacharya, former SBI Chairman, it has been reportedly decided that close end equity funds would not be approved unless they are unique.

A top fund official who attended this meeting told Cafemutual that the market regulator has expressed its concern over growing number of close end NFOs. “The idea behind scheme re-categorization was to bring uniformity across fund houses and rationalize the number of schemes. However, many fund houses have been launching series of close end schemes having similar features as that of their open-ended counterparts,” he added.

AMFI data shows that the mutual fund industry has received net inflows of close to Rs.19,333 crore from 42 close end equity funds last financial year. Most of these funds are series of mid and small cap funds. Only a few funds offered unique proposition last year.

So far, the industry has seen net inflows of Rs.3550 crore from 13 close end funds in the first four months of FY 2018-19, shows AMFI data.

It is pertinent to mention here that SEBI has expressed its concern over unusually high commission payouts to distributors by select fund houses. A few fund houses pay aggressive commission to distributors particularly on close end equity funds.

Another key decision at the MFAC meeting was the constitution of a committee to draft a FAQ on mutual fund regulations. The CEO of a private fund house said, “Due to frequent regulatory changes and amendments to the mutual fund regulations, we, at times, get confused on how to ensure compliance with the norms. Hence, we sought SEBI’s direction through FAQs to bring uniformity in our practices.”


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rahul kulkarni · 7 months ago
its a welcome decision. Few fund houses are just selling each month series 1, series 2 etc which is not necessary when open end schemes are there. FMP is okay. but equity close end schemes should strictly be banned. its an exercise to sell more by showing 10 Rs nav but again scheme has to compulsorily redeem after 03 or 04 years when market may be or may not be favourable. Also compulsory redemption when investor do not require it generate again reinvestment risk.
Prashant · 7 months ago
So it means SEBI found all the NFOs unique till date. Which means that SEBI is responsible for allowing so many closed ended funds to be sold. Why blame us when they allow and AMCs manufacture such products which are not right and unethical? And now after so many years SEBI is doing this means now all A's stomachs are full and they don't need to bring NFOs.
Shame shame shame
sandeep · 7 months ago
Thank god,ab to sebi ki nind khuli,,,,,,,,
krishnan Iyer · 7 months ago
Much needed move Happy to say that I have not sourced single open closed ended
Tapan Paul · 7 months ago
Now we are relief from pushing AMC . Interesting when we are did not participant close ended fund ,then AMC 's relation also drop .
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