News shortcuts: From the Courts | Top Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | Professional Updates | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
General »
 Why a simplified tax regime is the need of the hour
 Settling The Old vs New Tax Regime debate
 Mutual funds for a first-time investor
 All eyes on Nirmala Sitharaman's second Budget for tax relief
 FM must slash income tax rates, only way to stimulate demand
 Govt may go for income tax relief to spur demand, says report
 Countries should tax the money that their citizens make globally
 Personal income tax rate cut can revive economy
 Economic slowdown hits Income Tax collections
 IFSC and tax bills tabled in Parliament on Monday
 How to calculate tax liability on LTCG accrued from selling gold?

SEBI wants, MFs to ensoure quality of debt papers
November, 23rd 2010

Concerned over the quality of papers that mutual fund are investing in, market regulator SEBI has asked six of them to refile their offer documents for capital protection scheme.

In a capital protection scheme, fund houses usually invest a hefty chunk (say 80 per cent) of investor money in debt papers, while parking the remaining 20 per cent with equities.

SEBI has asked the concerned MFs to disclose in the offer documents how they would protect the investors money in these schemes, sources said, but refused to identify these fund houses.

Future offers would also have to abide by this SEBI directive, the sources said.

Sources said the market regulator wants the fund houses to invest in debt papers which have got high grades from rating agencies.

This is to maximise returns of the fund from fixed- income instruments.

Equity investment is done by MFs to increase the capital base of the fund.

Sebi wanted to ensure that the capital of the investor is protected and that the fund house does not give negative returns.

"Sebi wanted to introduce a stringent capital guarantee provision for such schemes of MFs. They want to ensure that even if the fund house is not able to give positive returns, the money invested should be back," Value Research CEO Dhirendra Kumar said.

Currently new fund offers of two fund houses-- JP Morgan Asset Management and Sundaram-- are open for subscription.

Investors to these schemes seek returns and minimise risk of capital loss by investing in a portfolio of fixed income securities.

Diversification of portfolios between fixed income and equities spreads risk across various asset classes and if an investor stays invested for longer term the risk arising out of volatility in the market is reduced, said a fund manager at a mutual fund.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2020 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting