Listen to this article
SEBI has directed all fund houses through AMFI to put in place a policy that will protect the interests of investors who have invested in small and midcap funds.
In a communication sent to fund houses, AMFI said, “In the context of the froth building up in the small and mid-cap segments of the market and the continuing flows in the small and mid-cap schemes of mutual funds, trustees, in consultation with unitholder protection committees of the AMCs shall ensure that a policy is put in place to protect the interest of all investors.”
However, the market regulator said that such policies should not be restricted to managing inflows/outflows, rebalancing portfolio and so on.
The new policy should also ensure that a limited set of investors should not get first mover advantage when it comes to redemption. This indicates that AMCs have to put a guardrail to ensure safety of individual investors especially during market dislocation and liquidity issue.
AMFI has asked fund houses to put these policies on their website within 21 days.
