New Delhi: Market regulator Sebi is going to change the rules of mutual funds in the new year. Rules are being changed to make mutual funds more transparent and safe for investors. Some of these changes will come into effect from January 1 and some thereafter. If you are planning to invest in mutual funds in the year 2021, then you must be aware of these changes in the rules. Let us know what are these changes.
New riskometer tool
Market regulator SEBI provides investors with a riskometer tool to assess the risk before investment. Now from January 1, 2021, the category of ‘very high risk’ will also be added to this tool, so that investors can get an accurate idea about the product. This facility will come into effect from 1 January. It will also be evaluated every month. From January 1, a separate risk category will be shown on all the schemes and the fund house will have to inform the investors if the risk profile of the scheme changes.
Portfolio allocation for multi-cap equity mutual fund schemes
In September, Sebi made some changes in portfolio allocation for multi-cap equity mutual fund schemes. Now as per the changed rules, a multi-cap mutual fund scheme would have to invest in equity at least 75 per cent instead of 65 per cent. Multi-cap equity mutual funds schemes have to invest at least 25-25 per cent in large-cap, midcap and small-cap stocks. There is currently no allocation restriction in the multi-cap fund category.
NAV calculation change
From January 1, 2021, mutual fund investors will receive net asset value after purchase reaches NAV Asset Management Company (AMC), no matter the size of the investment. This will not apply to liquid and overnight mutual fund schemes. Till now, NAV used to purchase up to 2 lakhs of the day before the money reached AMC.
Inter-scheme transfer of securities
From January 1, 2021, inter-scheme transfer of close-ended funds will be required by investors within three business days of the unit being allotted to the scheme. Such transfer will not be allowed after three business days.
Change the name of the dividend option
With effect from April 1, 2021, all dividend options in mutual fund schemes will be renamed as income distribution cum capital withdrawal.