New Mutual Funds Rules That Comes Into Effect In 2021

 

The mutual funds have gone through many ups and down in 2020. SEBI (securities and exchange board of India) has announced some changes with effect from 1 January 2021 for a transparent and flexible investment in the best mutual funds. 


The respective regulations in mutual funds ease people to know better about the best mutual funds to invest in.

• New addition in the risk-o-meter tool:

The high-risk mutual funds will be disclosed to the investors for a wise decision. The risk-o-meter will reveal the monthly status of the high-risk mutual fund, including AMC's disclosure. This risk-o-meter will introduce clarity about the best mutual funds to invest in. 

• The inter-scheme transfer must be done in 3 business days:

SEBI has made the regulation that the debt paper transfer from one mutual fund to another has to be done within three business days. SEBI has further cleared that IST's will not influence rumors or any news regarding this in media.

• Regulations done in the calculation of NAV:

There are many regulations done by SEBI to make the best mutual funds more approachable to investors. According to the circular issued by SEBI, a decision has taken that except for the overnight and liquid schemes, the purchase of units of mutual fund schemes, closing NAV of the day shall be available for utilization irrespective of the size and time of receipt of such application." No matter the size of the investment, as soon as the investor's money reaches AMP, then the AMP of the day can be purchased by the investor.

• By April 2021, the dividend option will be renaming:

SEBI has introduced to rename the dividend option of mutual funds, which will affect April 2021. The new name is suggested as income distribution cum capital withdrawal. 

• The portfolio allocation of multi-cap equity mutual funds has regulated:

SEBI has twisted the old rules and introduced the new rules for the people to have the best mutual funds. The investment of 75% in the equities must be there for the multi-cap mutual fund scheme. There must also be an investment of 25% in small, mid, and large-cap stocks by these multi-cap mutual fund schemes. Before January 2021, the investment required was 65%. The portfolio of multi-cap equity mutual funds has been regulated to choose the investors' best mutual funds. 


A Brief About the Mutual Funds:

Although we are sure that the term mutual fund is really common term that we hear very regularly. Specially the today’s generation has been using this word more often than anybody else for a reason. Mutual funds are considered as the stocks of the company, which people trade or invest in. The stock market is the place where mutual funds are traded. There are multiple types of mutual funds available, and knowing intricate details about them is important if you want to start trading and get into the world of stock markets.

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