Sebi approves new rules to widen investment avenues
The board of Sebi has sanctioned new regulations aimed at portfolio managers, paving the way for innovative investment avenues. These guidelines enable investments in mutual funds, international securities, and diverse commodity derivatives. Portfolio managers now have the flexibility to direct client funds towards mutual fund direct plans and initial public offerings.
The Securities and Exchange Board of India (Sebi) has recently approved new regulations aimed at expanding investment opportunities for portfolio managers. These updates permit portfolio managers to invest in foreign securities and introduce a revamped settlement framework. Additionally, the rules allow foreign portfolio investors to engage in a broader range of exchange-traded commodity derivatives.
Under the revised guidelines, portfolio managers will have the ability to invest in mutual fund units directly, providing clients with access to direct plans of mutual funds, including exchange-traded funds (ETFs), index funds, and specialized investment funds. The minimum investment amount would be set at ₹25 lakh, with fixed management fees restricted to 1% of the client's assets under management (AUM).
The introduction of the Portfolio Manager Route (PRIM) means that portfolio managers will be able to offer mutual fund and Specialized Investment Fund (SIF)-based strategies, thereby increasing access to regulated, professionally managed investment frameworks. Furthermore, portfolio managers will be permitted to invest in initial public offerings (IPOs) and primary issuances in the debt market, as well as up to 10% of a client's AUM in investment grade, non-convertible unlisted debt securities under discretionary portfolio management services (PMS).
This framework also provides greater flexibility for investment in exchange-traded derivatives, allowing an exposure of up to 1.25 times the client's AUM. The new rules extend the scope of permissible investment to foreign securities, encompassing listed equity and debt, real estate investment trusts (REITs), overseas mutual funds, exchange-traded funds (ETFs), index funds, and foreign government debt.
Additionally, the new PMS framework introduces independent fund managers who can collaborate with registered portfolio managers in managing client portfolios while retaining full responsibility and liability for the independent fund manager's activities. This development could potentially broaden the reach of portfolio management services (PMS) by opening up a wider range of investment options for a greater number of investors.
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