SEBI tells AMCs to invest in schemes based on risk

Amends rules to ensure ‘skin in the game’

Capital markets regulator SEBI has amended mutual fund rules, requiring fund houses to invest in their own schemes depending on the risk level to ensure ‘skin in the game’.

The current rule requires an investment of 1% of the amount raised in a New Fund Offer (NFO) or an amount of ₹50 lakh, whichever is less.

In a notification, SEBI said asset management companies (AMCs) will have to invest in their own schemes based on risk level. “The asset management company shall invest such amounts in such schemes of the mutual fund, based on the risks associated with the schemes, as may be specified by the Board from time to time,” SEBI said. However, the regulator did not quantify the minimum amount. According to market experts, fund houses will have to invest more in riskier schemes like equity funds compared with less risky offers like debt funds.

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