Mutual fund schemes: Sebi brings in timelines for rebalancing portfolios

The Securities and Exchange Board of India (Sebi) Wednesday unveiled tips for the rebalancing of portfolios of the schemes launched by mutual funds.

According to Sebi, the rebalancing interval will probably be relevant within the occasion of deviation from mandated asset allocation talked about within the Scheme Information Document (SID) as a consequence of passive breaches. Barring in a single day funds, all schemes may have a mandated rebalancing interval of 30 days, within the occasion of deviation from mandated asset allocation talked about within the scheme info doc as a consequence of passive breaches. The mandated rebalancing interval for all mutual fund schemes, besides index funds and change traded funds (ETFs).

If the rebalancing is just not completed throughout the mandated timelines, justification in writing, together with particulars of efforts taken to rebalance the portfolio must be positioned earlier than the funding committee involved. The committee can lengthen the timelines as much as 60 enterprise days from the date of completion of the mandated rebalancing interval. According to Sebi, if the portfolio of schemes is just not rebalanced throughout the prolonged timelines, then the AMCs wouldn’t be permitted to launch any new scheme until the time the portfolio is rebalanced. They would even be disallowed from levying exit load.