sebi passive funds overlap rule index funds etfs
SEBI is reportedly considering stricter regulations for passive mutual fund schemes, including a possible 50% overlap cap across passive investment products. The proposed framework may apply to Index Funds and Exchange Traded Funds (ETFs), aiming to improve diversification and reduce excessive portfolio similarities.Portfolio overlap occurs when multiple funds hold a large number of identical securities. Excessive overlap can limit diversification benefits and make it difficult for investors to distinguish between investment products. A cap on overlap could encourage fund houses to offer more differentiated strategies.The passive investing segment has witnessed significant growth in recent years due to lower costs, simplicity, and increasing investor interest in index-based investing. As the market expands, regulators are focusing on improving transparency and investor protection.If implemented, the new rules could impact asset management companies, fund design strategies, and product launches across the mutual fund industry. Investors may benefit from improved portfolio diversification and greater clarity while selecting passive investment products.
SEBI is reportedly considering stricter regulations for passive mutual fund schemes, including a possible 50% overlap cap across passive investment products. The proposed framework may apply to Index Funds and Exchange Traded Funds (ETFs), aiming to improve diversification and reduce excessive portfolio similarities.Portfolio overlap occurs when multiple funds hold a large number of identical securities. Excessive overlap can limit diversification benefits and make it difficult for investors to distinguish between investment products. A cap on overlap could encourage fund houses to offer more differentiated strategies.The passive investing segment has witnessed significant growth in recent years due to lower costs, simplicity, and increasing investor interest in index-based investing. As the market expands, regulators are focusing on improving transparency and investor protection.If implemented, the new rules could impact asset management companies, fund design strategies, and product launches across the mutual fund industry. Investors may benefit from improved portfolio diversification and greater clarity while selecting passive investment products.
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