The Securities and Exchange Board of India SEBI has proposed changes to MF regulations to a significant portfolio overlaps and ensure that scheme names are "true to label." In a recent draft discussion released Friday, the regulator highlighted the need for clear limits to prevent multiple schemes from carrying similar portfolios within the same fund house.
To handle this, SEBI has reviewed the current scheme categorization. Under the rules, asset management companies launch another scheme within the same category provided the original scheme is at least five years old and has assets under management AUM exceeding Rs 50,000 crore.
Further, SEBI allows AMCs to merge an existing scheme with another if there is a mitigation in AUM, as per the new draft.
The regulator also underlines that while new schemes may share similar objectives, features, and disclosure norms, they must have separate fund managers and avoid similar naming to reduce investor confusion.
While retaining the five existing scheme categories, equity, debt, hybrid, solution-oriented, and others, including index and exchange-traded funds, SEBI has proposed greater consistency in naming to reflect each scheme.
To help investors distinguish between categories such as value and contra funds, SEBI also suggests eliminating portfolio overlaps between them.
Additionally, the tracking of portfolio overlap by new fund offerings NFOs is set yearly or based on month-end holdings.
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