The Securities and Exchange Board of India’s rule asking mutual funds to re-categorise schemes based on investment strategy will help investors get a better idea of what they are buying into, feel industry observers. The regulator’s objective behind the move is reduce confusion for mutual fund investors, and deter asset management companies (AMC) from coming out with overlapping products merely to boost their assets under management.
AMCs charge fees on the assets managed, and so larger the assets under management, more will be the income. Over the years, this has led to AMCs launching a slew of schemes without much to distinguish them from the existing offerings in the portfolio.
