SEBI has asked fund houses to invest at least 10% of the total assets of all open ended debt schemes except overnight, liquid and gilt funds in liquid assets like cash, government securities, t-bills and repo on g-sec.
Fund houses will be responsible for compliance with the requirement. This will come into effect from February 1, 2021.
Further, the market regulator has asked fund houses to undertake stress test of all open ended debt funds. So far, such a test is applicable for liquid and money market funds. This is to come into effect from December 1, 2020.
SEBI has asked AMCs to stipulate necessary guidelines to carry out stress testing of their debt schemes.
Stress testing is evaluating impact of various risk parameters like interest rate risk, credit risk and liquidity risk on the scheme and its NAV under various scenarios. AMCs adopt predetermined methodology, which is approved by the board of AMC to carry out such a testing.
