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Suresh P Iyengar
Starting this New Year mutual fund investors will get to purchase NAV (net asset value) of the day when their money reaches the asset management company, irrespective of the amount invested.
However, this rule will not be applicable to liquid and overnight scheme. Securities and Exchange Board of India had announced this new rule in September.
“It has been decided that in respect of purchase of units of mutual fund schemes (except liquid and overnight schemes), closing NAV of the day shall be applicable on which the funds are available for utilisation irrespective of the size and time of receipt of such application,” said the SEBI circular.
Under current rules, the NAV of the same day is considered for purchases of less than ₹2 lakh, even if the money does not reach the asset management firm but the order is placed within the cut-off time.
Risk-o-meter
SEBI has also introduced a fresh category of ‘very high’ risk on its risk-o-meter tool for investors to make better decisions with regard to high risk mutual funds. It replaces the old model based simply on a scheme’s category without adequately considering its actual portfolio.
Risk-o-meter shall be evaluated on a monthly basis and AMCs shall disclose the risk-o-meter along with portfolio disclosure for all their schemes on their website and on AMFI website within 10 days from the close of each month, SEBI had said.
MFs should also publish a history of risk-o-meter changes every year.
Inter-scheme transfer
Inter-scheme transfer in close-ended funds can only be done within three business days of the allotment of the scheme’s units to investors and not thereafter. SEBI had said inter scheme transfers involve shifting of debt papers from one MF scheme to another.
Under existing rules, SEBI only requires that such inter scheme transfers are done at market prices and that the transfer should be in conformity with the investment objective of the recipient scheme.
Inter scheme transfer in open ended schemes are allowed for meeting redemption-led liquidity requirement after trying out all other options to raise funds.
SEBI has also laid down that no inter scheme transfer is allowed if there are any negative market news or rumours about a security in the mainstream media or an alert is generated about a security by the fund’s internal risk assessment in the previous four months.
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