SEBI Plans to Introduce a New Asset Class

 A New Asset Class is to Be Introduced by SEBI

A new asset class targeted at high-risk investors will be introduced by the Securities and Exchange Board of India (SEBI). The new asset class will fall between portfolio management services (PMS) 2 and mutual funds. Madhabi Puri Buch, the chief of SEBI, says that there is a range of asset classes available to investors: mutual funds are for retail investors, PMS are in the middle, and AIF are for private equity. Buch further stated that SEBI is investigating the creation of a new asset class, since there is potential for one between mutual funds and PMS.

AMFI Discusses an Intermediate-Rate Investment

Association of Mutual Funds in India (AMFI), a trade association for mutual funds, provided clarification that the notion of creating a new asset class that sits between PMS and mutual funds is still in its infancy. 2. The trade association has been discussing a tool for investors seeking a middle-tier investing option between PMS 2 and mutual funds.

SEBI suggests a Standard Total Expense Ratio for All Mutual Fund Plans.

In an effort to increase transparency in the fees paid to unitholders, SEBI published a consultation document in May that suggested a standard total expense ratio (TER) for all mutual fund schemes. TER is the portion of the corpus of a plan that a mutual fund institution deducts for management and administrative costs. In response to a question regarding the TER, Buch stated that extensive back-testing and co-creation was taking place.

The idea by SEBI to launch a new class of assets for investors who take on high risk is still in its infancy. Giving investors additional opportunities to diversify their portfolios is a positive start, though. The new asset class, which would fall between mutual funds and portfolio management services (PMS), is geared toward high-risk investors. The Association of Mutual Funds in India (AMFI), the trade association for the mutual fund sector, is now discussing a product that would serve investors seeking a middle-tier investing option between mutual funds and PMS. In an effort to increase unitholder transparency about expenses, SEBI has also suggested a standard total expense ratio for all mutual fund schemes. TER is the portion of the corpus of a scheme that a the mutual fund house levies management and administrative fees among other costs.