Informist, Monday, Oct 30, 2023
By Krity Ambey
MUMBAI – The new high risk-high return mutual fund classification proposed by the Securities and Exchange Board of India may include both debt and equity schemes, Aditya Birla Sun Life Mutual Fund Chief Investment Officer Mahesh Patil said today.
“It (new mutual fund category) can come in both (equity and debt). Debt also, there are higher risk instruments available,” Patil told Informist on the sidelines of Business Standard BFSI Insight Summit 2023.
The Indian equity market regulator recently wrote to the Association of Mutual Funds in India on introduction of a new mutual fund category for high-risk funds that may offer higher profit to the investors. The mutual fund industry body AMFI is currently holding consultations on the suggestions. Aditya Birla Sun Life Mutual Fund is also a member of the industry body.
Higher risk debt instruments include bonds issued by corporates with lower credit rating, lower than AA-.
“People are giving their suggestions to that, in terms of what all you can do, where you can take slightly higher risk, higher leverage, take increased exposure to F&Os (future and options), so I think they will consider all the inputs and then take a call on that,” Patil said.
There are currently five categories of mutual funds based on risk factor — low, low to moderate, moderate, moderately high and high. “It (the high risk-high return fund) would come as a sixth category,” Patil said.
The minimum investment ticket size for this new category will certainly be lower than 5 mln rupees, Patil said. Through the new category SEBI intends to make a high risk asset class, falling between mutual funds and portfolio management services, available to retail investors.
The mutual fund industry saw net outflows of 661.92 bln rupees in September, with total assets under management of 46.58 trln rupees, according to AMFI data. End
Edited by Ashish Shirke
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