The Securities and Exchange Board of India (SEBI) has approved amendments to the Mutual Funds Regulations, 1996, paving the way for a new investment product.
The new product, designed to bridge the gap between traditional Mutual Funds and Portfolio Management Services (PMS), offers investors greater flexibility in portfolio construction while maintaining a regulated environment. It aims to address the growing concern of unregistered and unauthorized investment schemes that often promise unrealistic returns and exploit investors.
Key features of the new investment product include:
* Professional Management: The product will be professionally managed, ensuring that investors benefit from expert investment advice.
* Enhanced Flexibility: Investors will have more flexibility in customizing their portfolios based on their risk tolerance and investment goals.
* Higher Risk-Taking Capabilities: The product is designed to cater to investors with a higher appetite for risk and potential returns.
* Robust Safeguards: The product will not allow leverage or invest in unlisted and unrated instruments beyond those already permitted for mutual funds. Additionally, derivatives exposure will be limited to 25% of assets under management for purposes other than hedging and rebalancing.
The new product will be referred to as Investment Strategies to differentiate it from traditional mutual fund schemes. The minimum investment limit for the product has been set at Rs 10 lakh per investor across all investment strategies offered by a particular AMC.
SEBI's approval of this new investment product is expected to provide a boost to the Indian investment landscape, offering investors a wider range of options and greater control over their investments.
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