The Sebi on Monday tweaked product labelling norms for the Rs 27-trillion mutual fund business, introducing a brand new label referred to as ‘ very excessive’ danger.
The regulator additionally launched an in depth framework for assigning labels to numerous mutual fund schemes. For fairness schemes, the label will probably be depending on numerous elements corresponding to market cap, volatility and affect prices of the underlying shares. For debt schemes, the riskiness should be decided by elements corresponding to credit score danger, rate of interest danger and liquidity danger.
Based mostly on how the scheme fares on every of the parameters, fund homes should arrive at a worth, which can decide the risk-o-meter label. Sebi has mentioned the brand new framework will develop into efficient from January 1, 2021.
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