India’s market regulator has unveiled sweeping reforms to mutual fund rules, introducing new categories and allowing higher exposure to gold and silver instruments.
The Securities and Exchange Board of India (SEBI) aims to strengthen investor protection through clearer classifications and standardized disclosures in the $900 billion industry.
Equity mutual funds have attracted 12.02 trillion rupees over five years, stabilizing domestic markets amid volatile foreign capital flows.
SEBI expanded fund categories to 40 from 36, adding life-cycle funds for long-term investors and sectoral debt funds.
Stricter “true-to-label” rules will ensure portfolios align with defined asset classes, while curbing excessive overlaps across sectoral, value, and thematic schemes.
Portfolio overlaps between value and contra funds are capped at 50%, with thematic funds given three years to comply.
Asset managers must disclose category-wise overlaps monthly and discontinue solution-oriented schemes, merging them into similar structures subject to approval.
The revamped framework permits a residual allocation to gold and silver ETFs, formalizing precious metals as regulated diversification tools within equity and hybrid funds.
