Market regulator SEBI, in a circular on Wednesday, permitted mutual funds to write call options of stocks that are part of the benchmark indices under a covered call strategy. However, as per SEBI rules, the total notional value (taking into account strike price as well as premium value) of call options written by a scheme shall not exceed 15% of the total market value of equity shares held in that scheme. In case of any passive breach, the scheme will have seven trading days to re-balance the portfolio during which no additional calls can be written in the scheme.
Market regulator SEBI may soon tighten norms for liquid funds, the most popular mutual fund product among institutional investors with average assets under management (AUM) of over Rs 6 lakh crore. Proposals under consideration by SEBI for liquid schemes include mandatory minimum investments in short-term government bonds and stricter valuation norms. SEBI is also evaluating a proposal to introduce a lock-in period for investments in liquid funds but such a move could hamper investor interest. NAV of many liquid funds has been badly hit due to their exposure in IL&FS group which recently defaulted on payments to mutual funds.
Every mutual fund house incurs expenses. Mutual fund schemes are permitted to deduct these expenses from a portion of the investment assets held by it. Equity funds are allowed to charge up to 2.5% of the assets that a scheme manages; debt funds’ expenses are capped at 2.25%. Ideally, the lower the expense, the better it is as expenses reduce fund returns. But a low expense ratio is just one of the many parameters that investors should look at.
Mutual Funds received Rs 8,233 crore through systematic investment plans (SIPs) from the retail investors in December 2018. The SIP inflows registered a growth of 3.10% over the preceding month. SIP inflows stood at Rs 7,985 crore in November. However, total asset under management (AUM) of the industry declined by 5% to Rs 22.85 lakh crore in December as against Rs 24 lakh crore in November.
As per the latest data from Association of Mutual Funds in India (Amfi), the asset under management (AUM) of mutual funds grew for the sixth consecutive year in 2018 by 5.54% or Rs 1.24 lakh crore to Rs 23.61 lakh crore at the end of December 2018. The AUM stood at Rs 22.37 lakh crore at the end of December 2017. The growth in AUM was buoyed by consistent SIP inflows and a strong retail participation despite the market volatility and negative global factors. However, the AUM had surged by 32% to add over Rs 5.4 lakh crore in 2017.